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'        House  /  No.  1400 


REPORT 


OF  THE 


T7  L/<c  J-  J^  I 

^    OOMMISSIOX 


ON 


OLD  AGE  PENSIONS,  ANNUITIES 
AND  INSURANCE. 


J  A  X  LAKY,      1910. 


BOSTON: 

WEIGHT  &  POTTER  PRINTING  CO.,  STATE  PRINTERS, 

18  Post  Office  Square. 

1910. 


^  -   /->    -    1^ 


H-D  7/^^ 


DOCUMENTS 
■rvr.  DEPT. 


7 


Cije  CommontoealtJ)  of  ^a00acI)U0ett0, 


Boston,  January  15,  1910. 
To  tlif  General  Court  of  Massachusetts. 

In  accordance  with  the  provisions  of  chapter  127  of  the 
Eesolves  of  1907,  and  of  subsequent  resolves,  we  have  the 
honor  to  transmit  the  following  report. 


MEMBERS  OF  THE  COMMISSION. 


MAGXUS    W.    ALEXANDER,    Chairman. 
JAMES   T.   BUCKLEY. 
MRS.   :\r.   R.    HODDER. 
ARTHUR  Yl.   IIUDDELL. 
WALTER  G.   CHASE. 


F.   SpE^^CER  Baldwin,   Executive  Secretary. 


BESOLVES. 


I 


Chapter  127,  Resolves  of  1907. 

Resolve  to  provide  for  an  Investigation  and  Report  relative 
TO  THE  Adoption  of  a  System  of  Old  Age  Insurance  and 
Pensions. 

Resolved,  That  the  .eovernor,  with  the  advice  and  consent  of  the 
council,  is  hereby  authorized  and  requested  to  appoint  a  commis- 
sion consisting  of  five  persons,  citizens  of  the  commonwealth,  one 
of  whom  he  shall  designate  as  chairman,  to  investigate  and  con- 
sider the  various  systems  of  old  age  insurance  or  old  age  pensions, 
or  annuities,  proposed  or  in  operation  in  this  commonwealth  or 
elsewhere,  and  report  upon  the  advisability  of  establishing  an  old 
age  insurance  or  pension  system  in  the  commonwealth.  Said  com- 
mission shall  report  also  statistics  showing  the  probable  expense 
to  the  commonwealth  of  the  various  systems  considered,  and  of  any 
system  that  they  may  recommend  for  adoption,  together  with  any 
bills  or  other  suggestions  for  legislation  relating  to  this  subject  that 
they  may  deem  wise.  At  least  one  of  said  commissioners  shall  be 
a  prominent  representative  of  employers,  and  at  least  one  of  said 
commissioners  shall  be  a  prominent  representative  of  employees. 
Said  commissioners  shall  serve  without  pay  and  shall  not  be  au- 
thorized to  travel  outside  of  the  commonwealth,  but  they  may  incur 
such  expense  for  assistance  or  othenvise  as  may  be  allowed  by  the 
governor  and  council.  The  commission  shall  report  the  result  of  its 
investigations  to  the  general  court  on  or  before  the  fifteenth  day 
of  January  in  the  year  nineteen  hundred  and  nine,  together  with 
such  drafts  or  ])ills,  if  any,  as  may  be  necessary  to  carrs'^  its  recom- 
mendations into  effect.  The  total  expense  to  be  incui-red  under  the 
provisions  of  this  resolve  shall  not  exceed  twenty-five  hundred 
dollars. 

[Introduced  in  the  House  .January  14,  1907,  by  Representative  Bernard  J. 
Ferber;  approved  June  26,  1907.] 


Chapter  131,  Resolves  of  1908. 

Resolve  to  provide  for  the   Expenses  of  the  Commission  on 
Old  Age  Insurance  and  Pensions. 

Resolved,  That  there  be  allowed  and  paid  out  of  the  treasury  of 
the  commonwealth  a  sum  not  exceeding  fifteen  thousand  dollars,  to 


8  '   RESOLVES. 

be  expended  liy  the  commission  appointed  by  chapter  one  hundred 
and  twenty-seven  of  the  resolves  of  the  year  nineteen  hundred  and 
seven,  to  investigate  and  report  upon  systems  of  old  age  insurance 
and  pensions,  in  carrying  out  the  investigations  prescribed  by  the 
said  cha^Dter. 

{The  foregoing  was  laid  before  the  Lieutenant  Governor,  Acting 
Governor,  on  the  fourth  day  of  June,  1908,  and  after  five  days  it 
had  "  the  force  of  a  laic ",  as  prescribed  by  the  constitution,  as 
it  was  not  returned  by  him.  with  his  objections  thereto  within  that 
time. ) 


Chapter  1,   Resolves  of  1909. 

Resolve  extending  the  Time  for  the  Final  Report  of  the  Com- 
mission   APPOINTED    TO    INVESTIGATE    THE    VARIOUS    SYSTEMS    OP 

Old  Age  Insurance,  Pensions  and  Annuities. 

Besolved,  That  the  commission  which  was  appointed  under  author- 
ization of  chapter  one  hundred  and  twenty-seven  of  the  resolves  of 
the  year  nineteen  hundred  and  seven,  to  investigate  and  consider  the 
various  systems  of  old  age  insurance  or  old  age  pensions,  or  annui- 
ties, proposed  or  in  operation  in  this  commonwealth,  or  elsewhere, 
and  report  upon  the  advisability  of  establishing  an  old  age  insur- 
ance or  pension  system  in  this  commonwealth,  is  hereby  continued, 
and  the  time  within  which  the  commission  shall  present  its  final  re- 
port is  hereby  extended  to  the  fifteenth  day  of  January,  nineteen 
hundred  and  ten.     [Api^roved  January  18,  1909. 


CONTENTS. 


age  pensions,  in 


I.     Introductory  statement,    .... 

1.  Appointment  of  commission, 

2.  Plan  of  investigation, 
II.    Statistical  study  of  aged  poor  in  Massachusetts, 

1.  Scope  and  method  of  investigation, 

2.  Classified  statistics  of  aged  population, 

3.  Expenditures  for  relief  of  aged  population, 

4.  Aged  almshouse  population, 

5.  Non-dependent  aged  poor, 

6.  Comparative  social  statistics  of  aged  poor, 
III.     Descriptive  account  of  existing  systems  of  old 

surance  and  annuities,  . 

1.  Origin  of  the  problem, 

2.  Old  age  pension  s.ystems  in  foreign  countries, 

(a)  Germany,  .... 

(6)  England,  .... 

(c)   Denmark,  .... 

(f?)  Belgium,  .... 

(e)   France,  ..... 

(/)    Italy, 

(f/)  New  Zealand, 

(h)  New  South  Wales,    . 

(i)    Victoria,  .... 

(/)    Australia,  .... 

(k)  Canada,  .... 

(I)    Austria,  .... 

3.  Pension  legislation  in  the  United  States, 

(a)  National  legislation,  relating  chieflj'  to  militarj'  pen 

sions,  ....... 

(b)  Pension  legislation  in  various  States, 

4.  Pension  systems  of  American  railroad  and  industrial  corpo- 

rations, ....... 

5.  Pension  system  of  the  Friedrich  Krupp  Company, 

6.  Old  age  benefits  of  Briti.sh  friendly  societies, 

7.  Old  age  benefits  of  fraternal  organizations, 

8.  Superannuation  benefits  of  trade  unions, 

9.  Industrial  insurance,  ...... 

10.   Massachusetts  savings  bank  insurance,  ... 

l\'.     Proposed  plans  of  old  age  i)ensions,     ..... 

1.  Bills  introduced  in  Massachusetts  Legislature,  1903  to  1909, 

2.  Schemes  proposed  by  individuals,         .... 

(a)  Annuity  .system  for  employees,  proposed  by  Magnus  W 

Alexander,   ....... 

(b)  Scheme  of  pensions  for  em])loyees  of  companies,  jjro- 

poscd  by  Augustus  P.  Loring,  Esq., 

(c)  Contributory  scheme  of  old  age  pensions,  proposed  by 

Sir  John  Pilter,      ..... 
\'.     The  general  question  of  old  age  pensions  and  insurance, 
1.  Analysis  of  existing  and  proposed  schemes, 

(a)  Universal  non-contributory  pension  schemes   (Charles 
Booth,  Edward  Everett  Hale), 


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10 


CONTENTS. 


PAOE 


V.    The  general  question  of  old  age  pensions  and  insurance  —  Concluded. 

1.  Analysis  of  existing  and  proposed  schemes — Concluded. 

(6)  Partial  non-contributory  pension  schemes  (England, 
Australia),    ........ 

(c)  Compulsory  contributory  insurance  with  State  subsidy 
(Germany),  ....... 

{d).  Voluntary  contributory  insurance  with  State  subsidy 
(Belgium),    ........ 

(e)  Voluntary  insurance  under  public  administration 
(Canada,  Massachusetts),        ..... 

(/)  Voluntary  insurance  imder  private  management  (in- 
dustrial insurance,  corporation  schemes), 

2.  Fundamental    questions    of    principle    involved    in    old    age 

pension  problem,  ...... 

(a)  The  question  of  contributory  versus  non-contributory 

pensions,       ........ 

(b)  The    question    of    voluntary    versus    compulsory    in- 

surance,       .  .  .  .  .  • 

(c)  The  question  of  universal  versus  partial  schemes, 

3.  The  wages  question  and  the  pension  problem, 

4.  Old  age  pensions  and  poor  relief,  ..... 
VI.    Cost  of  various  pension  schemes  as  applied  in  Massachusetts, 

(a)  Cost  of  universal,  non-contributory  schemes, 

(b)  Partial  non-contributory  schemes,       .... 

(c)  Compulsory  contributory  insurance,  with  State  subsidy, 

(d)  Voluntarj'  contributory  insurance,  with  State  subsidy, 

(e)  General  estimates,    . 
VII.    The  question  of  municipal  pensions,   . 

1.  Nature  of  the  problem, 

2.  Pension  systems  in  American  cities, 

(a)  New  York, 

(b)  Boston,  .... 

3.  Pension  systems  in  foreign  cities, 

(o)  Liverpool, 
(6)   London, 

(c)  Manchester, 

(d)  Edinburgh, 

(e)  Berlin,     .... 
(/)    Hamburg, 
(g)  Nuremburg,     . 
(h)  Marseilles, 
(i)    Paris,       .... 

VIII.     General  conclusions  concerning  non-contributory  pensions,   com- 
pulsory insurance  and  universal  schemes, 
(a)  Non-contributory  pensions, 
(&)  Compulsory  insurance,       .... 
(c)   Universal  schemes,  ..... 
IX.    Conclusions    and    recommendations   concerning  pensions  for 

nicipal  and  other  public  employees, 
X.     Final  conclusions  and  recommendations, 
Appendix :  — 

A.  Drafts  of  bills,         ...... 

B.  Statistics  of  aged  paupers  in  Massachusetts, 

C.  Statistics  of  aged  inmates  of  benevolent  homes, 

D.  Legislation  concerning  teachers'  pensions, 

E.  Savings  and    insurance  sj^stems    of    the    Friedrich    Krupp  Com- 

pany,   


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402 


^X^Ifit  Of 


Sf!' 


REPORT  OF  THE  MASSACHUSETTS  COMMIS- 
SION ON  OLD  AGE  PENSIONS,  ANNUI- 
TIES AND  INSURANCE. 


I. 
IXTRODrCTORY    STATEMENT. 


1.     Appoi:n^tment  of  Commission. 

The  Massachusetts  Commission  on  Old  Age  Pensions,  An- 
nuities and  Insurance  was  established  bj  chapter  127  of  the 
Resolves  of  1907,  which  was  approved  June  26,  1907.  In 
accordance  with  its  provisions,  His  Excellency  the  Governor, 
Curtis  Guild,  Jr.,  appointed  the  following  persons  as  mem- 
bers of  the  commission :  Edward  S.  Bradford  of  Springfield, 
chairman,  James  T.  Buckley  of  Marlborough,  Mrs.  M.  R. 
Hodder  of  Boston,  Arthur  M.  Huddell  of  Boston,  and  James 
R.  Prendergast  of  Boston.  On  November  26  Mr.  Prender- 
gast  resigned,  and  "Walter  G.  Chase  of  Boston  was  appointed 
to  fill  the  vacancy.  On  December  23  Mr.  Bradford  resigned. 
This  vacancy  was  not  filled  until  June  30,  1908,  when  Mag- 
nus W.  Alexander  of  Lynn  was  appointed  as  chairman  of  the 
commission. 

During  the  first  year  of  the  commission's  existence  the 
scope  of  its  work  was  necessarily  restricted  by  the  small 
amount  of  the  appropriation  placed  at  its  disposal.  In  June, 
1908,  the  passage  of  a  resolve  appropriating  an  additional 
sum  of  $15,000  for  the  use  of  the  commission  (chapter  131, 
Resolves  of  1908)  enabled  it  to  proceed  thoroughly  with  the 
investigation.  The  grant  of  this  appropriation  made  it  pos- 
sible to  employ  an  investigator  to  conduct  the  comprehensive 
inquiry  called  for  by  the  instructions  of  the  commission.  For 
this  purpose  F.  Spencer  Baldwin  was  engaged,  and  later  was 


12  OLD   AGE   PENSIONS.  [Jan. 

made  executive  secretary  of  the  commission.  As  the  addi- 
tional approi^riation  did  not  become  available  until  June, 
1908,  the  commission  found  it  necessary  to  ask  the  General 
Court,  in  January,  1909,  to  extend  the  term  of  the  commis- 
sion for  one  year,  in  order  that  the  investigation  might  be 
completed  and  the  results  reported  in  an  adequate  manner. 
This  extension  of  time  was  granted  by  a  resolve  (chapter  1, 
Eesolves  of  1909),  which  provided  that  the  final  report  of  the 
commission  should  be  presented  not  later  than  January  15, 
1910,  instead  of  January  15,  1909,  as  fixed  in  the  original 
resolve. 

In  a  preliminary  report,  submitted  to  the  General  Court 
at  the  last  session,  the  commission  explained  the  plan  of 
investigation  that  had  been  adopted  and  presented  a  brief 
account  of  old  age  pension  and  insurance  systems  in  foreign 
countries  and  of  retirement  systems  established  by  Amer- 
ican railroad  and  industrial  corporations.  The  investiga- 
tion has  now  been  finished  according  to  the  plan  outlined 
and  the  results  are  submitted  in  this  report. 

The  commission  has  held  seventv-six  meetings  and  has 
given  eight  public  hearings,  as  follows :  Boston,  February 
26,  1908;  Boston,  April  6,  1908;  Pittsfield,  October  8,  1908; 
Springfield,  October  15,  1908;  Fall  River,  March  29,  1909; 
Worcester,  April  30,  1909;  Lowell,  June  3,  1909;  Boston, 
September  30,  1909.  The  total  attendance  at  the  hearings 
was  about  600. 

Of  the  $17,500  appropriated  by  the  General  Court  for  the 
use  of  the  commission,  $16,045.28  has  been  expended,  leav- 
ing in  the  treasury  a  balance  of  $1,445.72.^ 

The  commission  desires  to  make  appreciative  acknowledg- 
ment of  valuable  assistance  received  from  many  sources.  Es- 
pecial thanks  are  due  to  representatives  of  the  United  States 
diplomatic  and  consular  service  in  foreign  cities;  to  officials 
of  the  national  government  and  the  State  governments  in  this 
country;  to  the  heads  of  various  governmental  departments 
of  this  Commonwealth;  to  the  superintendents  of  the  State 

1  This  was  the  balance  standing  to  the  credit  of  the  commission  January  15.  1910, 
when  its  term  expired.  A  few  bills  incurred,  but  not  yet  paid,  will  reduce  this  balance 
slightly. 


1910.]  HOUSE  — No.  1400.  13 

Infirmary  and  the  State  Farm;  to  overseers  of  the  poor  and 
superintendents  of  almshouses  in  cities  and  towns  of  the  Com- 
monwealth ;  to  the  mayors  of  cities  in  this  Commonwealth 
and  in  other  States ;  to  the  secretaries  of  the  Associated  Char- 
ities of  Boston,  Cambridge  and  other  cities  in  Massachusetts ; 
and  to  many  others  who  have  given  the  commission  courteous 
aid  in  furthering  the  progress  of  its  work. 

The  commission,  furthermore,  desires  to  express  its  high  ap- 
preciation of  the  work  of  the  secretary,  F.  Spencer  Baldwin. 

2.     Plan  of  Investigation. 
The  instructions  of  the  commission  call  for  investigation 
of  three  general  questions :  — 

1.  What  are  the  various  systems  of  old  age  insurance,  pen- 
sions or  annuities  proposed  or  adopted  in  this  Commonwealth 
or  elsewhere  ? 

2.  Is  it  advisable  to  establish  a  system  of  old  age  insur- 
ance, pensions  or  annuities  in  this  Commonwealth  ? 

3.  As  a  special  phase  of  the  preceding  question,  what  would 
it  cost  to  take  such  action  ? 

The  first  question  demands  an  inquiry  into  the  various 
plans  of  old  age  insurance,  pensions  or  annuities  that  have 
been  proposed  or  tried  in  modern  States.  After  such  in- 
formation has  been  obtained,  the  second  question  then  re- 
quires a  consideration  of  the  expediency  and  economy  of 
introducing  one  of  these  schemes  or  any  other  plan  in  Mas- 
sachusetts. In  order  to  answer  this  question  intelligently,  it 
is  necessary  to  ascertain  the  facts  as  to  the  number  and  con- 
dition of  the  aged  population  of  this  State,  in  particular, 
the  facts  regarding  ]:)auperism  and  dependency  among  the 
aged.  The  question  of  the  advisability  of  adopting  a  pen- 
sion, insurance  or  annuitv  svstem  cannot  be  determined  bv 
a  mere  consideration  of  the  advantages  and  disadvantages, 
the  benefits  and  drawbacks  of  the  ]ilan  in  general.  The 
scheme  must  be  judged  with  reference  to  the  concrete  condi- 
tions in  this  Commonwealth  in  i)articular.  It  is  necessary 
t(^  ascertain  how  many  persons  must  be  provided  for,  how 
much  must  be  exiiendcd,  and  what  n(>ed  there  may  be  for 


14  OLD   AGE   PENSIONS.  [Jan. 

adopting  the  scheme,  as  shown  by  the  present  condition  of  the 
aged  population.  In  this  connection  the  cost  of  operating 
the  various  plans  must  be  determined,  as  called  for  in  an- 
swer to  the  third  question.  It  is  necessary  to  determine  not 
only  how  many  persons  would  be  entitled  to  participate  and 
what  the  expense  would  be  of  providing  for  them  in  the  pro- 
posed manner,  but  also  what  the  present  cost  is  of  maintain- 
ing the  dependent  part  of  this  population  under  existing 
methods  of  poor  relief,  and  what  saving,  if  any,  in  such  ex- 
penditure might  be  expected  to  result  from  the  adoption  of 
the  plan. 

The  facts  needed  to  throw  light  on  these  questions  are,  in 
brief :  the  number  of  persons  of  pensionable  age ;  the  number 
of  such  persons  in  correctional  institutions  and  in  hospitals 
and  almshouses  for  the  insane;  the  number  of  such  persons 
cared  for  in  public  pauper  and  private  benevolent  institu- 
tions during  one  year,  and  the  amount  of  expenditure;  the 
number  of  such  persons  not  dependent  upon  public  or  private 
charity,  who  would  be  entitled,  however,  by  reason  of  their 
poverty,  to  share  in  the  benefits  of  any  pension  plan.  These 
facts  are  fundamental  to  a  consideration  of  the  desirability 
and  practicability  of  establishing  in  Massachusetts  any  one 
of  the  general  schemes  of  pension,  insurance  or  annuity  which 
have  been  adopted  or  advocated  elsewhere.  In  every  branch 
of  the  inquiry,  the  condition  of  the  aged  population,  finan- 
cial, industrial  and  social,  must  be  studied,  with  a  view 
to  determining  the  need  of  any  pension  system  and  the  prob- 
able effect  of  suggested  measures  upon  the  condition  of  the 
aged  population. 


1910.]  HOUSE  — No.  1400.  15 


11. 

STATISTICAL  STUDY  OF  AGED  POOR  IN  MASSA- 
CHUSETTS. 


1.     Scope  and  Method  of  Investigation. 

The  object  of  this  investigation  was  to  assemble  certain 
concrete  facts  that  have  been  indicated  as  fundamental  to  an 
intelligent  consideration  of  the  advisability  of  adopting  a  pen- 
sion scheme  in  this  State.  ^  The  general  nature  of  the  facts 
called  for  has  already  been  set  forth.  It  was  necessary  to 
institute  an  independent  statistical  investigation,  in  order  to 
obtain  the  required  information.  The  only  needed  fact  that 
could  be  definitely  established  from  existing  statistics  was 
the  total  number  of  persons  of  pensionable  age  in  the  State ; 
that  is,  65  years  of  age  and  over,  or  70  years  of  age  and  over. 
The  further  facts  regarding  the  percentages  of  the  pension- 
able population  in  institutions  of  various  classes,  in  receipt 
of  relief  of  different  kinds,  and  so  on,  had  to  be  gathered  by 
independent  inquiry. 

The  investigation  involved  a  partial  census  of  the  aged 
population  of  the  State.  The  age  limit  of  C5  years  was  se- 
lected as  the  dividing  line  for  this  purpose ;  that  is,  only  per- 
sons of  65  years  of  age  and  over  were  enumerated.  The  age 
of  65  is  the  one  fixed  as  the  pensionable  age  in  most  schemes. 
In  Great  Britain  and  Germany,  however,  the  higher  age  of 
70  years  is  taken  as  the  minimmii.  In  this  investigation, 
accordingly,  a  separate  count  was  made  for  the  population  of 
70  years  of  age  and  over,  with  a  view  to  determining  the 
number  of  the  pensionable  population  at  this  age,  as  well  as 
at  the  lower  age  of  65  years,  and  the  respective  cost  of  pro- 
viding pensions  at  the  two  age  limits. 

•  For  the  sake  of  brevity,  the  words  "  pension  scheme  "  are  used  here  and  later  in  the 
report,  instead  of  the  longer  phrase  "  old  age  pension,  insurance  or  annuity  scheme." 


16  OLD   AGE   PENSIONS.  [Jan. 

Studied  from  the  point  of  view  of  the  objects  of  this  in- 
vestigation, the  population  of  65  years  of  age  and  over  falls 
into  the  following  divisions  :  — 

1.  Inmates  of  correctional  institutions. 

2.  Inmates  of  hospitals  and  asylums  for  the  insane. 

3.  Inmates  of  almshouses. 

4.  Inmates  of  benevolent  homes. 

5.  Recipients  of  public  outdoor  relief. 

6.  Recipients  of  private  outdoor  relief. 

7.  Recipients  of  State  and  military  aid,  soldiers'  relief  and  federal 
pensions. 

8.  Non-dependent  aged,  including-  persons  who  have  never  received 
aid  from  outside  sources,  public  or  private. 

The  information  concerning  these  classes  of  the  aged  popu- 
lation which  is  presented  in  this  report  has  been  gathered 
in  part  through  returns  made  by  officers  of  institutions  and 
societies  in  reply  to  inquiries  by  the  commission,  and  in  part 
by  agents  of  the  commission  through  personal  visits  to  insti- 
tutions, societies  and  individuals. 

The  investigation  of  the  aged  institutional  population,  in- 
cluding inmates  of  correctional,  pauper  and  benevolent  in- 
stitutions, was  extended  over  a  period  of  twelve  months, 
September  1,  1908,  to  September  1,  1909.^  The  number  of 
inmates  on  September  1,  1908,  65  years  of  age  and  over,  the 
number  admitted  during  the  succeeding  twelve  months,  and 
the  number  of  inmates  deceased,  discharged  or  transferred 
during  the  year,  were  duly  enumerated.  It  was  necessary  to 
extend  the  investigation  over  a  twelve-month  period,  in  order 
to  determine  the  full  extent  and  movement  of  this  popula- 
tion. A  mere  day  count  gives  only  a  partial  indication  of 
the  burden  imposed  by  this  dependent  class,  and  affords  an 
inadequate  basis  for  calculating  the  scope  and  the  cost  of  any 
pension  scheme.  It  is  essential  to  know  not  only  how  many 
persons  might  come  under  the  provisions  of  a  pension  scheme 

'  September  1,  1808,  was  selected  as  the  earliest  date  on  which  the  statistical  investi- 
gation could  be  startf^d.  The  appropriation  which  made  this  investigration  possible  was 
not  voted  until  June,  1908.  The  engagement  of  a  chief  investigator  and  the  formulation 
of  a  definite  plan  of  investiiration  required  several  weeks.  It  was  not  po.s.sible  therefore, 
to  be?in  the  statistical  enumeration  before  September  1. 


1910.]  HOUSE  — No.  1400.  17 

at  any  date,  but  how  many  persons  must  be  provided  for  dur- 
ing an  entire  year. 

It  is  obvious  that  an  investigation  of  this  scope  covering  a 
study  of  the  aged  population  during  an  entire  year  could  not 
be  made  absolutely  complete  and  accurate  in  all  its  details. 
Great  care,  however,  has  been  taken  to  make  the  enumera- 
tion comprehensive  on  the  one  hand,  and  to  exclude  duplica- 
tions on  the  other  hand.  Repeated  visits  have  been  made  by 
agents  of  the  commission  to  cities  and  towns,  in  order  to  ob- 
tain full  returns.  It  is  believed  that  the  census  of  the  aged 
population  in  almshouses  and  benevolent  homes  is  reasonably 
complete.  Doubtless  some  cases  of  aged  persons  in  receipt 
of  public  relief  outside  of  institutions  have  escaped  the  enu- 
merators. The  enumeration  of  aged  recipients  of  private 
outdoor  relief  is  only  partial,  for  reasons  that  are  later  ex- 
plained. The  same  statement  holds  true  of  the  enumeration 
of  aged  recipients  of  State  aid,  military  aid  and  soldiers'  re- 
lief, and  of  the  non-dependent  aged. 

1.  The  statistics  of  aged  inmates  of  correctional  institu- 
tions have  been  compiled  partly  from  the  records  in  the 
office  of  the  State  Board  of  Prison  Commissioners,  and  partly 
from  returns  obtained  through  agents  of  the  commission. 
The  statistics  cover  the  fourteen  county  jail?  and  the  four 
State  penal  institutions  that  have  aged  inmates,  namely, 
Oharlestown,  Bridgewater,  Rutland  and  Sherborn.  The  jail 
population  was  not  studied  in  detail,  as  regards  the  industrial 
and  financial  records  of  the  inmates,  as  this  class  does  not 
fall  strictly  within  the  scope  of  the  present  investigation. 
It  is  clear  that  the  members  of  the  criminal  class  would 
still  have  to  be  maintained  in  institutions,  even  if  a  pension 
system  were  adopted.  They  are,  moreover,  debarred  from 
the  receipt  of  a  pension  under  most  pension  schemes  that  have 
been  proposed  or  adopted.  In  estimating  the  scope,  cost  and 
need  of  any  pension  scheme,  the  prison  population  may  there- 
fore be  eliminated  from  detailefl  consideration. 

2.  The  statistics  of  aged  inmates  of  insane  asylums  and 
hospitals  were  furnished  by  the  superintendents  of  the  four- 
teen institutions.     This  class  of  the  pensionable  population 


18  OLD   AGE   PENSIONS.  [Jan. 

was  treated  in  the  same  manner  as  the  jail  population.  The 
insane  fall  outside  the  province  of  this  investigation,  strictly 
defined,  for  the  same  reason  that  has  been  explained  in  con- 
nection with  the  jail  population.  Consequently,  the  inmates 
of  institutions  for  the  insane  were  not  investigated,  further 
than  to  determine  the  numbers  in  the  age  groups  under  con- 
sideration. 

3.  The  aged  almshouse  population,  including  inmates  of 
the  two  State  institutions,  the  State  Farm  at  Bridgewater 
and  the  State  Infirmary  at  Tewksbury,  and  inmates  of  the 
192  local  almshouses  of  cities  and  towns,  was  enumerated  by 
means  of  card  schedules  which  were  filled  out  by  ofiicers  of 
the  institutions  and  agents  of  the  commission.  The  form  of 
schedule  used  for  this  purpose  called  for  detailed  information 
concerning  the  industrial  and  financial  records  of  the  aged 
inmates,  particularly  such  facts  as  would  throw  light  on  the 
causes  of  dependency,  and  the  possibility  of  providing  for 
these  persons  outside  of  institutions  by  a  pension  scheme. 

4.  The  aged  population  in  benevolent  homes,  including  in- 
mates of  84  institutions  maintained  by  private  charity,  was 
investigated  by  the  same  method  as  that  pursued  in  the  study 
of  the  almshouse  class.  Only  permanent  homes  were  in- 
cluded in  this  canvass.  Twenty  temporary  homes  open  to 
adults  were  visited  by  agents  of  the  commission,  but  it  was 
discovered  that  the  percentage  of  persons  65  years  of  age  and 
over  who  were  cared  for  in  this  class  of  institution  was  so 
small  as  to  be  practically  negligible.  The  persons  found  in 
these  homes  were,  with  very  few  exceptions,  below  the 
pensionable  age.  The  form  of  schedule  used  in  this  case  dif- 
fered slightly  from  the  almshouse  schedule,  as  the  inmates  of 
benevolent  homes  are  not  in  the  pauper  class,  and  conse- 
quently are  in  different  circumstances  from  the  almshouse 
population.  So  far  as  possible,  returns  were  obtained  through 
the  officers  of  institutions,  but  agents  were  sent  to  secure 
further  data  whenever  that  was  necessary. 

5.  The  aged  recipients  of  public  outdoor  relief,  including 
persons  partially  supported  by  the  State,  the  city  or  the  town, 
outside  of  institutions,  were  enumerated  through  the  assist- 


1910.]  HOUSE  — No.  1400.  19 

ance  of  overseers  of  the  poor.  The  form  of  schedule  used 
for  this  class  was  somewhat  different  from  that  employed  for 
the  institutional  population.  The  instructions  to  enumera- 
tors called  for  a  return  for  every  person  65  years  of  age 
and  over  given  poor  relief  by  State,  city  or  town  during  the 
twelve  months  September  1,  1908,  to  September  1,  1909.  No 
attempt  was  made  to  make  a  separate  "  day  count  "  and  "  year 
count,"  as  in  the  case  of  the  institutional  population.  That 
was  impracticable,  for  several  reasons.  The  enumeration  of 
all  persons  65  years  of  age  and  over  aided  by  the  city,  town 
or  State  on  a  given  date,  and  the  later  enumeration  of  all 
additions  and  withdrawals  during  the  next  twelve  months, 
would  have  required  innumerable  house-to-house  visits  in  each 
city  and  town  in  the  State,  and  would  have  entailed  an  enor- 
mous expense.  Indeed,  to  trace  all  deaths  and  removals  ac- 
curately would  be  well-nigh  impossible,  even  with  a  large 
permanent  staff  of  field  agents.  There  are  no  available  offi- 
cial records  which  give  full  information.  The  attempt  to 
make  such  a  separate  year  count  would,  under  the  circum- 
stances, have  resulted  in  much  repetition  and  duplication  of 
the  returns,  which  could  not  later  have  been  deducted  and 
eliminated.  For  these  reasons,  the  persons  aided  during  the 
course  of  the  year  were  enumerated  in  one  class,  without  fur- 
ther discrimination  as  to  new  cases,  deaths,  removals  and  the 
like. 

6,  The  aged  recipients  of  private  outdoor  relief,  including 
persons  aided  by  charitable  agencies  of  all  kinds  outside  of 
institutions,  were  studied  by  means  of  the  same  schedule  as 
that  used  in  the  case  of  the  public  outdoor  poor.  The  assist- 
ance of  officers  and  agents  of  charitable  societies  was  ob- 
tained in  securing  returns  for  this  class.  It  was  impossible, 
however,  to  make  a  complete  census  of  the  aged  beneficiaries 
of  private  charity.  The  obstacles  in  the  way  of  an  enumera- 
tion of  all  the  members  of  this  class  were  found  to  be  in- 
superable. In  the  first  place,  many  officers  of  societies  were 
naturallv  reluctant  to  furnish  information  concernins;  bene- 
ficiaries,  or  even  to  give  the  addresses  of  the  latter  to  agents 
of  the  commission.     The  relation  between  the  society  and  the 


20  OLD   AGE   PENSIONS.  [Jan. 

beneficiary  was  regarded  as  confidential,  and  tlie  request  for 
detailed  information  concerning  individual  cases  was  often 
refused,  for  this  reason.  Furthermore,  it  was  not  practicable 
to  follow  up  each  individual  case,  even  when  addresses  could 
be  obtained,  without  the  expenditure  of  a  disproportionate 
amount  of  time,  effort  and  money.  In  this  part  of  the  inves- 
tigation, therefore,  a  sufiicient  number  of  cases  to  be  repre- 
sentative of  the  condition  of  the  aged  private  outdoor  poor 
was  enumerated,  namely,  444  cases,  and  the  total  number  and 
the  expense  of  this  class  of  the  dependent  population  through- 
out the  State  were  estimated. 

7.  The  aged  recipients  of  State  aid,  military  aid,  soldiers' 
relief  and  United  States  pensions  were  covered  in  part  only, 
as  in  the  case  of  the  preceding  class  of  private  outdoor  poor. 
Here  again  certain  difficulties  rendered  complete  enumera- 
tion of  this  division  of  the  aged  population  impracticable. 
The  total  number  of  this  class  in  the  State  exceeds  25,000. 
It  was  possible,  however,  without  undertaking  the  expensive 
task  of  making  a  complete  census,  to  determine  from  avail- 
able records  the  approximate  number  of  beneficiaries  of  this 
class  65  years  of  age  and  over,  and  the  amount  of  aid  given. 
A  representative  number  of  cases,  1,645,  was  enumerated  on 
the  schedules  by  agents  of  the  commission. 

8.  The  class  of  aged  non-dependents,  including  persons  65 
years  of  age  and  over  not  assisted  by  public  or  private  char- 
ity, was  treated  by  the  same  method  as  that  adopted  in  the 
case  of  the  private  outdoor  poor  and  the  beneficiaries  of  mili- 
tary relief.  A  complete  census  of  this  class  would  require  a 
house-to-house  canvass  of  the  State.  The  number  actually 
enumerated  in  the  investigation  was  3,746.  The  schedule 
used  for  this  class  was  more  detailed  than  those  used  in  other 
divisions  of  the  investigation,  the  additional  questions  being 
designed,  to  bring  out  pertinent  facts  regarding  the  present 
financial  and  industrial  circumstances  of  the  non-dependent 
aged.  The  particular  portion  of  this  class  that  is  of  chief 
interest  in  an  investigation  of  this  character  is  the  group  just 
above  the  dependency  line,  but  below  the  poverty  line.  Tt  is 
important  to  estimate  the  size  and  the  composition  of  this 


1910.]  HOUSE  — No.  1400.  21 

oroup,  for  in  it  are  foimd  the  persons  who  have  the  strongest 
claim  to  pensions,  if  these  are  to  be  granted  at  all,  namely: 
the  deserving  aged  poor,  those  who  throngh  no  real  fault  of 
their  own  find  themselves  in  want  in  their  old  age.  This 
gronp  of  the  aged  deserving  poor,  by  reason  of  its  indeter- 
minate boundaries,  is  obviously  most  difficult  to  measure 
statistically. 

•2.     Classified  Statistics  of  Aged  Population. 

The  size  of  the  institutional  population  of  various  classes 
is  best  indicated  by  the  net  totals  for  the  year  covered  by  the 
investigation.  Accordingly,  the  figures  for  the  four  classes 
of  institutional  inmates  in  the  following  table  are  net  totals. 
These  totals  include  the  number  of  inmates  present  Septem- 
ber 1,  1008,  and  the  number  of  persons  admitted  during  the 
following  twelve  months,  exclusive  of  transfers  and  readmis- 
sions.  It  is  clear  that  the  latter  should  be  omitted  in  esti- 
mating the  real  extent  of  the  institutional  population  for  the 
year,  since  their  inclusion  would  mean  duplication  of  the  re- 
turns. The  net  totals  thus  obtained  show  in  each  case  the 
number  of  individuals  who  are  cared  for  in  institutions  at 
least  during  a  part  of  the  year.  This  number  is  the  best 
index  of  the  real  size  of  the  institutional  population. 

The  figure  for  the  total  population  65  years  of  age  and 
over,  177,000.  is  the  estimated  ])()] dilation  of  that  age  for  the 
year  1910.  The  estimate  is  obtained  by  taking  the  popula- 
tion 65  years  of  age  and  over,  as  given  by  the  State  census 
returns  for  1005,  which  is  in  round  figures  162,000,  and 
adding  for  each  year  to  1010  the  average  annual  increase  of 
this  class  of  the  population  during  the  preceding  decade, 
which  was  a])proximately  o.OOO.  The  figure  for  the  total 
population  of  70  years  of  age  and  over,  105,000,  is  obtained 
by  the  same  method  of  estimate,  on  the  basis  of  the  1905  re- 
turn of  a])proxiniately  06.000  ])crsons  in  this  age  class,  with 
an  addition  of  1.R00  fdi-  tlio  nnnunl  increase  in  each  year 
to  1910. 

The  totals  for  recipients  of  State  and  military  aid  and  sol- 
diers' relief  are  represented  in  the  totals  of  the  Ignited  States 


22 


OLD  AGE   PENSIONS. 


[Jan. 


pensioners  given  immediately  below,  as  most  persons  who  re- 
ceive State  aid,  military  aid  and  soldiers'  relief  are  also 
United  States  pensioners.  Accordingly,  the  two  totals  for 
State  and  military  aid  and  for  soldiers'  relief  are  not  in- 
cluded in  calculating  the  number  of  persons  in  the  eighth 
class,  that  of  non-dependent  aged. 


Aged  Population  by  Classes. 


65  and 

Over. 


1.  In  correctional  institutions, 

2.  In  insane  asylums  and  hospitals, 

3.  In  almshouses,    .... 

4.  In  benevolent  homes, 

5.  Recipients  of  public  outdoor  relief, 

6.  Recipients  of  private  outdoor  relief, 

7.  (a)  Recipients  of  State  and  military  aid, 
(6)   Recipients  of  soldiers'  relief,  . 
(c)    United  States  pensioners, 

8.  Non  dependent  aged  (including  all  not  classed  in  preced- 

ing seven  groups). 

Total, 


556 

1,961 

3,480 

2,598 

3,075 

2,312 

10,888 

■     4,767 

27,230 

135,788  1 


177,000 


70  and 

Over. 


179 
1,148 
2,204 
1,960 
2,082 
1,550 
6.164 
2,699 
15,417 
80,460  « 


105,000 


1  These  numbers  are  obtained  by  subtracting  the  corresponding  totals  of  the  first 
seven  classes,  exclusive  of  the  recipients  of  State  and  mihtary  aid  and  soldiers'  relief, 
from  the  total  number  of  persons  65  years  of  age  and  over  and  70  years  of  age  and 
over,  namely:  177,000  and  105,000,  respectively. 

The  following  tables  show  by  counties  the  extent  and  the 
movement  of  the  institutional  population  of  various  classes, 
and  of  the  aged  poor,  both  institutional  and  non-institutional, 
for  the  year  September  1,  1908,  to  September  1,  1909 :  — 


1910.] 


HOUSE  — No.  1400. 


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1910.] 


HOUSE  — No.  1400. 


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OLD  AGE   PENSIONS. 


[Jan. 


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Net  Total  for 

12  Months,  Exclusive 

OF  Transfers  and 

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r-l                                              ^                                              t—        W 

Deaths,  Discharges 
AND  Transfers 
FOR  12  Months. 

c3 

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CO 

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1— (                                                                            T-l 

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Total  Inmates 
AND  Admissions 
FOR  12  Months. 

i 

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Admitted 

Sept.  1,  1908,  to 

Sept.  1,  1909. 

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Barnstable, 

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Nantucket, 

Norfolk,    . 

Plymouth, 

Suffolk,     . 

Worcester, 

1 

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.1910.] 


HOUSE  — No.  1400. 


27 


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28 


OLD   AGE   PENSIONS. 


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1910.] 


HOUSE  — No.  1400. 


29 


3.     Expenditures  for  Belief  of  Aged  Population. 

The  expenditures  for  the  relief  of  the  aged  population  in 
Massachusetts  may  be  classified  under  six  main  divisions, 
namely:  first,  for  the  support  of  almshouses;  second,  for  the 
maintenance  of  benevolent  homes ;  third,  for  public  outdoor 
relief;  fourth,  for  private  outdoor  relief;  fifth,  for  State  and 
military  aid  and  soldiers'  relief ;  sixth,  finally,  account  should 
be  taken  of  the  amount  expended  in  this  State  for  the  pay- 
ment of  federal  pensions,  although  this  is  an  expenditure  of 
the  national  government,  and  not  of  the  State  government 
or  of  private  charity  within  the  State.  The  following  table 
shows  the  numbers  of  persons  relieved  and  the  amounts  ex- 
pended in  the  various  classes :  — 

Expenditures  for  Relief  of  Aged  Population,  65  Years  of  Age 

AND  Over. 


Number  65 
and  Over. 

Amoimt  of 
Expenditure. 

Number  70 
and  Over. 

Amount  of 
Expenditure. 

In  almshouses, 

3,480 

$693,076  80 

2,204 

$438,948  64 

In  benevolent  homes, 

2,598 

783,556  80 

1,960 

591,136  00 

Public  outdoor  relief. 

3,075 

189,900  00 

2,082 

108,264  00 

Private  outdoor  relief. 

2,312 

320,998  08 

1,550 

215.202  00 

State  and  military 'aid. 

10,888 

602,650  80 

6,164 

341,177  40 

Soldiers'  relief. 

4,767 

286,053  61 

2.699 

161,956  82 

United  States  pensions, 

27,230 

4,192,875  00 

15,417 

2,373,909  00 

Total. 

38,695  ' 

$7,069,111  09 

23,213  1 

$4,230,593  86 

'  The  totals  for  State  and  military  aid  and  soldiers'  relief  are  not  included,  since 
they  are  represented  in  the  total  for  United  States  pensions. 


These  various  forms  of  relief  hardly  require  detailed  ex- 
planation, with  the  possible  exception  of  the  fifth,  —  State 
aid,  military  aid  and  soldiers'  relief.  The  expenditures  for 
almshouses  and  for  public  outdoor  relief  are  borne  by  the 
cities  and  towns  and  the  State,  the  latter  maintaining  two 
pauper  institutions  with  aged  inmates,  the  State  Farm  at 
Bridgewater  and  the  State  Infirmary  at  Tewksbury,  and  con- 
tributing toward  the  partial  support  of  outdoor  poor  who 
have  no  settlement  in  a  city  or  town.     The  expenditures  for 


30  OLD  AGE   PENSIONS.  [Jan. 

benevolent  homes  and  for  private  outdoor  relief  are  borne  by 
charitable  societies  and  organizations.  The  nature  of  State 
aid,  military  aid  and  soldiers'  relief,  the  three  forms  of  re- 
lief provided  by  law  for  veterans  and  their  dependents,  is 
less  familiar. 

The  conditions  for  the  grant  of  State  aid  are,  in  brief  :^ 
The  applicant  shall  be  a  bona  fide  resident  of  the  city  or 
town,  and  "  shall  be  in  such  needy  circumstances  as  to  re- 
quire assistance."  The  following  classes  are  eligible  under 
these  conditions :  ( 1 )  invalid  pensioners  who  served  in  the 
army  or  the  navy  during  the  civil  war  or  the  Spanish  war; 
(2)  dependent  relatives  of  men  who  served  in  either  of  the 
two  wars,  and  who  died  in  the  service,  or  later  after  honorable 
discharge;  (3)  dependent  wives,  widows  and  widows'  mothers 
of  men  reported  as  missing,  captured  or  believed  to  be  dead ; 
(4)  dependent  fathers  and  mothers  of  the  class  of  persons  for- 
merly qualified  for  State  aid  prior  to  the  amendment  of  the 
law  in  1867;  (5)  women  who  served  three  months  as  regular 
army  nurses.  The  amount  of  aid  is  limited  to  three-quarters 
of  the  pension,  or  $6  per  month  for  class  1 ;  to  $4  per  month 
for  classes  2,  3,  4  and  5. 

Military  aid  is  granted  to  the  following  classes  of  persons: 
(1)  veterans  of  the  civil  and  the  Spanish  wars  who  have  a 
settlement  in  the  city  or  town,  are  "  poor  and  indigent,  and 
by  reason  of  sickness  or  other  physical  disability  in  such  need 
as  would  entitle  to  relief  under  the  pauper  laws  ",  and  are 
not  in  receipt  of  other  State  or  military  aid  or  pension,  nor 
eligible  to  admission  to  a  soldiers'  or  sailors'  home;  (2)  in- 
valid pensioners  with  a  settlement  in  the  city  or  the  town, 
entitled  to  State  aid,  whose  pension  and  State  aid  combined 
are  inadequate  for  their  relief,  and  who  "  would  otherwise 
receive  relief  under  the  pauper  laws  " ;  (3)  persons  having  all 
the  qualifications  under  class  1  except  settlement,  and  who 
have  been  residents  of  the  Commonwealth  three  years;  (4) 
persons  having  the  qualifications  under  class  2  except  settle- 
ment, and  who  have  been  residents  of  the  Commonwealth  for 

*  See  chapter  79,  Revised  Laws""ofl  Massachusetts,  for  provisions  relating  to  State 
aid,  and  also  to  military  aid  and  soldiers'  relief. 


1910.] 


HOUSE  — No.  1400. 


31 


three  years.     No  provision  is  laid  down  as  to  the  amount 
of  military  aid. 

There  are  further  provisions  which  apply  both  to  State 
and  to  military  aid.  No  person  shall  receive  both  State  and 
military  aid  at  the  same  time.  Neither  State  nor  military 
aid  shall  be  paid  to  "  any  person  able  to  support  himself  ", 
who  is  in  receipt  of  income  or  owns  property  sufficient  for 
his  support;  and  such  aid  shall  be  paid  only  to  an  amount 
sufficient,  with  other  resources,  for  the  recipient's  relief  or 
support. 

The  State  reimburses  cities  and  towns  for  the  entire 
amount  of  State  aid  and  of  military  aid  granted  to  persons 
of  the  third  and  fourth  classes,  and  for  one-half  of  the  amount 
of  military  aid  granted  to  persons  of  the  first  and  second 
classes. 

Soldiers'  relief  is  granted  to  veterans  of  the  civil  war  who 
have  a  regular  settlement  in  the  city  or  town,  and  are  "  poor 
and  entirely  or  partially  unable  to  provide  maintenance  for 
themselves  and  dependents,  on  account  of  disability  incurred 
through  other  cause  than  their  own  criminal  or  wilful  mis- 
conduct." Such  persons  shall  receive  relief  in  such  amount 
as  may  be  necessary.  Soldiers'  relief  is  also  granted  to  the 
dependent  survivors  of  persons  eligible  for  its  receipt.  The 
entire  amount  of  soldiers'  relief  is  paid  by  the  city  or  the 
town. 

1.  The  number  of  persons  65  years  of  age  and  over  who 
were  cared  for  in  almshouses  during  the  year  September  1, 
1908,  to  September  1,  1909,  as  enumerated  in  this  investiga- 
tion, was  3,480.  This  number  is  the  net  total  of  the  alms- 
house population  for  the  year ;  that  is,  it  includes  all  inmates 
on  September  1,  1908,  and  all  persons  admitted  during  the 
twelve  months  following,  exclusive  of  cases  of  transfer  and 
readmission.  The  average  weekly  per  capita  cost  of  main- 
tenance in  the  almshouses  is  estimated  as  $3.83.  This  es- 
timate is  based  on  the  figure  of  $3.06,  given  as  the  average 
weekly  cost  per  capita  of  almshouse  support  in  the  report  of 
the  State  Board  of  Charity  for  1909,  with  an  additional  per 
capita  amount  of  77  cents,  representing  an  allowance  of  5  per 


32  ■       OLD   AGE   PENSIONS.  [Jan. 

cent,  for  interest  and  depreciation  on  the  capital  invested  in 
almshouse  plants.  The  total  cost  of  maintaining  the  3,480 
almshouse  inmates  65  years  of  age  and  over,  at  $3.83  per 
capita,  as  thus  estimated,  was  $093,076.80. 

The  number  of  inmates  70  years  of  age  and  over  was 
2,204;  the  total  cost  of  maintenance  was  $438,948.64. 

2.  The  number  of  persons  65  years  of  age  and  over  sup- 
ported in  benevolent  'institutions  maintained  by  private 
charity  during  the  year  September  1,  1908,  to  September  1, 
1909,  was  2,598.  This  figure  is  the  net  total  of  the  popula- 
tion in  benevolent  homes,  as  obtained  by  the  same  method  as 
that  followed  in  enumerating  the  almshouse  population.  The 
average  weekly  per  caj^ita  cost  of  maintenance  in  benevolent 
homes  was  $5.80,  including  an  allowance  of  5  per  cent, 
on  the  capital  invested  in  the  institutions.  The  total  cost 
of  supporting  the  2,598  inmates,  at  $5.80  per  capita,  was 
$Y83,556.80. 

The  number  of  inmates  70  years  of  age  and  over  was  1,960  ; 
the  total  cost  of  maintenance  was  $591,136. 

3.  The  number  of  persons  65  years  of  age  and  over  who 
received  public  outdoor  relief  from  State,  city  or  town  during 
the  year  September  1,  1908,  to  September  1,  1909,  as  enumer- 
ated in  the  investigation,  was  3,075.  The  average  weekly 
per  capita  amount  of  such  relief  is  given  in  the  report  of  the 
State  Board  of  Charity  for  1909  as  $1.  On  the  basis  of  that 
figure,  the  total  expenditure  for  public  outdoor  relief  of  per- 
sons 65  years  of  age  and  over  during  the  year  was  $189,900. 
This  amount  does  not  include  an  allowance  for  the  cost  of 
administration. 

The  number  of  persons  70  years  of  age  and  over  who  re- 
ceived public  outdoor  relief  during  the  year  was  2,082 ;  the 
total  amount  expended  on  this  class  was  $108,264. 

It  may  be  noted  here  that  the  number  of  aged  persons 
given  public  relief  outside  of  institutions  is  less  than  that 
of  the  aged  almshouse  inmates.  The  net  total  of  the  alms- 
house population  65  years  of  age  and  over  is  3,480,  while  the 
number  of  the  non-institutional  public  poor  is  3,075.  In  the 
general  pauper  population  the  persons  partially  supported 


1910.]  HOUSE  — No.  1400.  33 

outside  of  institutions  greatly  outnumber  the  almshouse  in- 
mates. The  reason  for  the  comparatively  small  number  of 
aged  persons  in  the  non-institutional  group  is  doubtless  to  be 
found  in  the  fact  that  old  men  and  women  who  are  given 
public  relief  are  usually  of  necessity  sent  to  the  almshouse. 
Comparatively  less  aid  in  the  home  is  given  to  the  aged  than 
to  the  younger  dependents  on  public  relief.  Thus  the  aged 
institutional  paupers  outnumber  the  aged  outdoor  poor. 

4.  The  number  of  persons  65  years  of  age  and  over  w^ho 
received  private  outdoor  relief,  through  charitable  institutions 
and  organizations,  during  the  year  September  1,  1908,  to 
September  1,  1909,  is  estimated  at  2,312.  This  estimate 
is  obtained  on  the  basis  of  the  assumption  that  the  number  of 
persons  receiving  private  outdoor  relief  bears  the  same  ratio 
to  the  number  of  persons  cared  for  in  benevolent  institutions 
that  the  number  of  recipients  of  public  outdoor  relief  bears  to 
the  number  of  inm^ates  of  almshouses.  It  was  impossible,  for 
reasons  elsewhere  stated,  to  make  a  complete  enumeration 
of  all  persons  receiving  aid  in  their  homes  through  agencies 
of  private  charity.  The  persons  receiving  public  outdoor 
relief,  however,  were  enumerated  fully,  as  were  the  inmates 
of  pauper  and  benevolent  institutions.  From  these  data  an 
estimate  could  be  made  of  the  number  of  persons  65  years  of 
age  and  over  in  receipt  of  private  outdoor  relief.  The 
average  per  capita  amount  expended  weekly  in  private  out- 
door relief  was  $2.67,  as  shown  by  the  returns  for  444  cases 
enumerated  in  this  investigation.  The  total  amount  ex- 
pended during  the  year  for  the  relief  of  the  2,312  persons  65 
years  of  age  and  over,  at  $2.67  per  capita,  was  $320,998.08. 

The  number  of  persons  70  years  of  age  and  over  who  re- 
ceived private  outdoor  relief  was  1,550 ;  the  total  amount  of 
such  relief  was  $215,202. 

5.  The  number  of  persons  65  years  of  age  and  over  who 
received  State  and  military  aid  in  1908  is  estimated  at 
10,888,  This  estimate  is  based  on  an  im-estigation  of  1.000 
cases  of  State  and  military  aid  in  the  cities  and  an  equal 
number  in  the  towns,  through  the  records  in  the  cities  and 
the    records    in    the    office    of   the    Commissioner    of    State 


34  OLD   AGE   PENSIONS.  [Jan. 

Aid  and  Pensions  at  the  State  House.  It  was  found  that 
68  per  cent,  of  the  cases  investigated  were  65  years  of  age 
and  over.  The  total  number  of  persons  reported  by  the  com- 
missioner as  receiving  State  and  military  aid  in  1908  was 
16,012.  If  68  per  cent,  of  the  number  were  65  years  of 
age  and  over,  the  total  number  of  persons  of  that  age  class 
would  be  10,888,  as  stated.  The  average  per  capita  amount 
of  State  and  military  aid  is  $55.35.  The  total  amount  of 
State  and  military  aid  granted  to  the  10,888  beneficiaries 
65  years  of  age  and  over,  at  $55.35  per  capita,  was 
$602,650.80. 

The  number  of  persons  70  years  of  age  and  over  who  re- 
ceived State  and  military  aid,  estimated  in  a  similar 
manner,  was  6,164;  the  total  amount  of  aid  granted  to  this 
class  was  $341,177.40. 

The  number  of  persons  65  years  of  age  and  over  given 
soldiers'  relief  in  1908  is  estimated  at  4,767 ;  the  amount  of 
such  aid  at  $286,053.61. 

The  number  of  persons  70  years  of  age  and  over  given 
soldiers'  relief  is  estimated  at  2,699 ;  the  amount  of  such  aid 
at  $161,956.82. 

These  figures  were  obtained  by  estimates  from  the  amounts 
of  expenditures  for  State  aid,  military  aid  and  soldiers'  relief 
given  in  the  report  on  the  cost  of  municipal  government  in 
Massachusetts,  issued  by  the  Bureau  of  Statistics,  1908. 
The  amount  expended  for  soldiers'  relief  by  the  cities  and 
towns  was  calculated  from  the  figures  given  in  this  report  as 
$420,667.08.  If  the  percentage  of  persons  65  years  of  age 
and  over  among  the  recipients  of  soldiers'  relief  be  the  same 
as  that  among  the  beneficiaries  of  State  and  military  aid, 
namely,  68  per  cent.,  then  $286,053.61  may  be  taken  as  repre- 
senting the  proportion  of  the  total  expenditure  on  soldiers' 
relief  that  goes  to  persons  65  years  of  age  and  over.  The 
average  per  capita  amount  given  for  soldiers'  relief  may  be 
safely  assumed  to  be  not  greater  than  $5  a  month,  or  $60  a 
year;  for  the  average  per  capita  expenditure  for  State 
and  military  aid  is  only  $55.35.  On  the  basis  of  an  average 
yearly  per  capita  expenditure  of  $60,  the  number  of  persons 


1910.]  HOUSE  — No.  1400.  35 

65  years  of  age  and  over  among  whom  the  $286,053.61  was 
distributed  woidd  be  4,767,  as  given  above.  The  figures  for 
the  number  of  beneficiaries  of  soldiers'  relief  70  years  of  age 
and  over  and  the  amount  expended  on  this  class  were  esti- 
mated in  a  similar  manner. 

6.  The  number  of  federal  pensioners  65  years  of  age  and 
over  in  Massachusetts  is  estimated  at  27,230 ;  the  amount  paid 
to  this  class  in  pensions  at  $4,192,875. 

The  number  of  pensioners  70  years  of  age  and  over  is  esti- 
mated at  15,417 ;  the  amount  paid  to  this  class  in  pensions  at 
$2,373,909. 

These  figures  were  obtained  by  estimate  from  the  returns 
of  the  number  of  pensioners  in  the  State  and  the  amount  paid 
in  pensions  furnished  by  the  United  States  Commissioner  of 
Pensions.  The  total  number  of  federal  pensioners  in  Massa- 
chusetts in  1908  was  40,044.  The  total  amount  paid  these 
pensioners  was  $6,166,127.63.  This  shows  an  average  yearly 
per  capita  payment  of  $153.98.  If  the  percentage  of  per- 
sons 65  years  of  age  and  over  be  the  same  in  the  case  of  the 
federal  pensioners  as  in  the  case  of  the  recipients  of  State 
and  military  aid,  namely,  68  per  cent.,  then  the  number  of 
pensioners  65  years  of  age  and  over  may  be  figured  at 
27,230,  as  stated  above.  The  total  pension  expenditure  for 
this  class,  at  the  rate  of  $153.98  per  capita,  may  be  estimated 
at  $4,192,875.  The  figures  for  the  number  of  pensioners  70 
years  of  age  and  over  and  the  pension  expenditure  for  this 
class  were  estimated  in  a  similar  manner. 

4.     Aged  Almshouse  Population. 

Figures  of  the  extent  and  movement  of  the  aged  almshouse 
population  during  the  year  covered  by  this  investigation  have 
already  been  given.  The  number  of  inmates  65  years  of  age 
and  over  September  1,  1908,  was  2,387;  the  number  of  ad- 
missions during  the  next  twelve  months  was  1,170;  the 
number  of  deaths,  discharges  and  transfers  was  1,083 ;  the 
number  of  inmates  remaining  September  1,  1909,  was  2,474. 
The  gross  total  of  all  admissions  during  the  twelve  months  was 
3,557 ;  the  net  total  of  the  almshouse  population  for  the  year. 


36  OLD   AGE   PENSIONS.  [Jan. 

including  all  inmates  at  the  beginning  of  the  year  and  all 
persons  admitted  during  the  twelve  months,  exclusive  of 
transfers  and  other  duplications,  was  3,480.  The  number 
of  admissions  was  about  33  per  cent,  of  the  gross  total;  the 
number  of  deaths,  discharges  and  transfers  was  about  30 
per  cent,  of  the  latter;  the  net  increase  during  the  year 
amounted  to  3.6  per  cent. 

The  statistics  of  almshouse  pauperism  in  the  United  States 
given  in  a  special  report  of  the  United  States  Census  Bureau, 
published  in  1904,  afford  a  basis  for  some  interesting  com- 
parisons with  the  facts  as  to  the  extent,  movement  and  social 
condition  of  the  aged  almshouse  population  gathered  in  this 
investigation.^ 

Number  and  Extent.  —  The  number  of  almshouse  inmates 
65  years  of  age  and  over  on  September  1,  1909,  namely, 
2,474,  represents  approximately  25  per  cent,  of  the  total  alms- 
house population  in  this  State.  The  corresponding  propor- 
tion for  the  United  States  as  a  whole  is  33  per  cent.,  accord- 
ing to  the  census  returns.  The  percentage  of  persons  65 
years  of  age  and  over  is  considerably  larger  in  the  indoor 
pauper  class  than  in  the  general  population.  In  Massa- 
chusetts less  than  6  per  cent,  of  the  general  population  is  65 
years  of  age  and  over.  This  contrast  emphasizes  the  fact 
that  institutional  pauperism  is  very  largely  an  incident  or 
accompaniment  of  old  age. 

The  yearly  movement  of  the  aged  pauper  population,  as 
shown  by  the  relative  number  of  admissions,  and  of  deaths, 
discharges  and  transfers  during  twelve  months,  is  less  exten- 
sive than  that  of  the  pauper  population  in  general.  The 
census  report  gives  the  percentage  of  admissions  to  the  entire 
number  of  inmates  in  almshouses  in  this  State  during  the 
year  1904  as  59,  and  the  percentage  of  deaths,  discharges  and 
transfers  as  57.  These  figures  are  nearly  double  the  corre- 
sponding percentages  for  the  almshouse  population  65  years 
of  age  and  over,  as  previously  stated,  namely,  33  and  30  re- 
spectively. This  means  that  the  aged  portion  of  the  alms- 
house population  is  more  permanent,  or  less  mobile,  than 

>  See  "Special  Report  on  Paupers  in  Almsliouses,"   United  States  Census  Bureau 
1904. 


1910.]  HOUSE  — No.  1400.  37 

are  the  indoor  paupers  in  general.  The  yearly  ebb  and 
tlow  of  the  almshouse  population  is  less  marked  in  the  case  of 
the  aged  than  in  the  case  of  the  entire  class.  This  greater 
stability  is  a  condition  that  might  naturally  be  expected  in  the 
case  of  the  aged  almshouse  inmates. 

Age  at  Admission.  —  The  great  majority  of  the  aged  inmates 
entered  the  institution  late  in  life.  Less  than  1  per  cent, 
of  those  for  whom  the  age  at  entrance  was  stated  in  the  returns 
became  inmates  before  the  age  of  40 ;  only  8  per  cent,  entered 
before  the  age  of  60 ;  thus  92  per  cent,  had  passed  the  sixtieth 
year  before  they  took  up  residence  in  the  almshouse.  The 
percentages  of  admissions  after  the  years  of  40  and  of  60  are 
not  so  high  for  the  almshouse  population  of  the  United  States, 
being  69  and  40.5  respectively.  The  strikingly  high  propor- 
tion of  persons  entering  pauper  institutions  late  in  life  points 
to  the  close  connection  between  old  age  and  institutional 
pauperism.  It  is  clear  that  such  pauperism  is  in  most  cases 
the  result  of  the  infirmity  of  advancing  years,  rather  than 
of  the  misfortunes  of  earlier  years.  The  table  on  p.  43  shows 
the  numbers  and  the  percentages  of  the  aged  institutional 
population  admitted  at  different  ages,  the  figures  for  benevo- 
lent homes  being  added,  for  the  purpose  of  comparison  with 
those  for  the  almshouses. 

Sex  and  Conjugal  Condition.  —  In  the  classification  of 
aged  almshouse  inmates  according  to  sex,  the  striking  fact  is 
the  heavy  preponderance  of  males.  The  percentages  are: 
Males,  61.4  per  cent. ;  females,  38.6  per  cent.  The  corre- 
sponding percentages  in  the  pauper  population  of  the  United 
States  are  64  per  cent,  and  36  per  cent,  respectively.  In  the 
total  population  of  Massachusetts  the  division  by  sex  is: 
males,  48.7  per  cent. ;  females,  51.3  per  cent.  It  thus 
appears  that  the  male  element  of  the  population  contributes  a 
disproportionate  share  of  institutional  paupers.  This  may 
be  due  to  the  fact  that  aged  women  are  more  largely  provided 
for  by  private  charity  than  are  aged  men.  The  percentages 
of  men  and  of  women  among  the  aged  inmates  of  benevolent 
homes  are  30.6  per  cent,  and  69.4  per  cent,  respectively,  or 
approximately  the  reverse  of  the  almshouse  proportion. 


38  OLD   AGE   PENSIONS.  [Jan. 

In  respect  to  conjugal  condition,  the  high  percentage  of 
widoAved  is  significant.  The  figures  are:  single,  25.4  per 
cent. ;  married,  15.4  per  cent. ;  widowed,  57.8  per  cent. ; 
divorced,  1.4  per  cent.  The  figures  for  the  marital  condition 
of  paupers  given  in  the  United  States  census  report  also  show 
a  heavy  proportion  of  widowed,  as  follows:  single,  52.1  per 
cent. ;  married,  16  per  cent. ;  widowed,  27.8  per  cent. ;  di- 
vorced, 1.3  per  cent. ;  unknown,  2.8  per  cent.  For  the  gen- 
eral population  of  this  State  the  percentages  are:  single, 
55.54  per  cent. ;  married,  37.76  per  cent. ;  widowed,  6.36  per 
cent. ;  divorced,  .26  per  cent. ;  unknown,  .08  per  cent.  It  is 
evident  that  widowhood  is  an  important  factor  in  aged 
pauperism. 

Length  of  Residence  in  Massachusetts.  —  The  number  of 
aeed  almshouse  inmates  who  have  lived  in  the  State  less  than 
five  years  is  very  small,  representing  only  1  per  cent,  of  the 
total  number  65  years  of  age  and  over.  On  the  other  hand, 
83.6  per  cent,  have  been  residents  of  the  State  for  thirty 
years  or  mote.  In  the  almshouse  population  of  the  United  ^ 
States  the  proportion  of  inmates  with  five  years'  residence  or 
less  is  2.3  per  cent.  The  percentage  of  persons  in  the  total 
population  of  this  State  who  have  lived  here  five  years  or  less 
is  25.17  per  cent.  It  thus  appears  that  recent  immigrants  do 
not  furnish  any  considerable  number  of  recruits  for  the 
aged  almshouse  population. 

Family  Connections.  —  The  returns  show  that  about  one- 
half  of  the  aged  inmates  of  almshouses  had  adult  children  or 
other  near  relatives  living  at  the  time  of  entrance ;  but  only  a 
very  small  percentage  have  adult  children  or  other  near  rela- 
tives able  to  assist  them  at  the  present  time,  namely,  7.7. 
This  fact  throws  much  light  on  the  possibility  of  diminishing 
the  almshouse  population  by  establishing  a  pension  system. 
It  is  evident  that  aged  inmates  having  no  children  or  rela- 
tives with  whom  they  could  live  would  not,  as  a  rule,  be  en- 
abled by  the  grant  of  small  pensions  to  leave  the  almshouses. 
The  table  on  p.  43  shows  the  family  connections  of  aged  in- 
mates of  almshouses,  in  comparison  with  aged  inmates  of 
benevolent  homes. 


1910.]  HOUSE  — No.  1400.  39 

Country  of  Birth  and  Parentage.  —  The  foreign-born  con- 
stitute a  much  higher  percentage  of  the  aged  pauper  popu- 
lation than  of  the  general  population.  The  percentage  of 
foreign-born  among  the  almshouse  inmates  65  years  of  age 
and  over  is  66.5 ;  in  the  entire  poj)ulation  of  the  State  it  is 
30.6 ;  and  in  the  United  States  it  is  only  15.3.  In  the  total 
ahnshouse  population  of  the  State  the  foreign-born  make  up 
53  per  cent.  Only  13  per  cent,  of  the  native-born  among 
the  aged  almshouse  inmates  were  born  in  this  State ;  whereas 
the  percentage  of  Massachusetts-born  in  the  total  native-born 
population  of  the  State  is  80.  It  is  thus  manifest  that  the 
great  bulk  of  aged  pauperism  in  the  Commonwealth  is  im- 
ported rather  than  home-grown. 

As  regards  the  country  of  birth  of  the  foreign-born,  Ireland 
leads,  with  70.5  per  cent. ;  Canada  and  England  and  Wales 
stand  second  and  third,  with  11.4  per  cent,  and  9.1  per  cent, 
respectively;  France,  Italy,  Russia,  Poland,  Hungary  and 
Bulgaria  have  each  less  than  1  per  cent.  In  the  State  at  large 
the  leading  nationalities  rank  the  same :  Ireland  leading,  with 

25.7  per  cent. ;  Canada  following,  with  12.9  per  cent. ;  and 
England  coming  third,  with  9.1  per  cent.  In  the  general  pop- 
ulation of  the  United  States  the  leading  nationalities  repre- 
sented in  the  foreign-born  are:  Germany,  with  25.8  per  cent. ; 
Ireland,  with  15.6  per  cent. ;  Canada,  with  11.4  per  cent.  In 
the  total  pauper  population  of  Massachusetts,  the  representa- 
tion of  nationalities  among  the  foreign-born  stands  practically 
as  it  does  in  the  aged  almshouse  population :  Ireland  leading, 
with  53.9  per  cent. ;  Canada  following,  with  16.1  per  cent. ; 
and  England  and  Wales  coming  third,  with  11.2  per  cent. 
The  striking  fact  in  these  statistics  is  the  high  percentage  of 
foreign-born  paupers  furnished  by  Ireland. 

Among  the  native-born  aged  pauper  population  the  propor- 
tion of  persons  of  foreign  parentage  is  not  high,  being  only 

11.8  per  cent,  of  the  total  native-born. 

The  percentage  of  naturalized  voters  among  the  foreign- 
born  males  is  70.1  for  the  aged  almshouse  inmates,  as  com- 
pared with  41.6  for  the  general  population. 

Physical  Condition  and  Earning  Poirer.  —  The  number  of 


40  OLD   AGE   PENSIONS.  [Jan. 

aged  almsliouse  inmates  having  physical  defects  is  large,  as 
one  would  naturally  expect.  The  total  percentage  of  defec- 
tives is  93.8.  Of  the  particular  defects  enumerated,  the  fol- 
lowing show  the  highest  percentages:  aged  and  infirm,  29.2 
per  cent,  of  the  total  number  having  physical  defects  of  some 
kind;  chronic  diseases,  25.8  per  cent.;  rheumatic,  18.2  per 
cent: ;  crippled,  maimed  or  deformed,  14  per  cent. ;  feeble- 
minded, 8.4  per  cent.  In  the  total  pauper  population  of  the 
United  States  the  feeble-minded  show  the  highest  percentage 
among  the  physical  defectives,  constituting  20.2  per  cent,  of 
all  the  paupers  enumerated.  The  aged  and  infirm  come  next, 
with  17.4  per  cent. ;  followed  by  the  crippled,  maimed  or  de- 
formed, with  13.6  per  cent. ;  the  insane,  with  10.3  per  cent. ; 
and  the  rheumatic,  with  5.8  per  cent.  The  small  percentages 
of  feeble-minded  and  insane  among  the  aged  paupers  in  this 
State  are  due  to  the  fact  that  provisions  have  been  made  for 
these  classes  in  special  institutions,  whereas  in  many  other 
States  they  are  cared  for  in  the  almshouses.  It  is  obvious 
that  the  physical  defects  of  the  aged  pauper  population  may 
have  been  acquired  in  large  part  after  admission  into  the 
institutions ;  consequently,  these  percentages  do  not  show  the 
precise  causes  of  pauperism.  A  more  definite  indication  on 
this  point  is  afforded  by  the  percentages  showing  the  causes  of 
loss  or  impairment  of  earning  power. 

In  respect  to  the  present  earning  power  of  aged  almshouse 
inmates,  79.1  per  cent,  of  those  for  whom  information  was 
furnished  were  returned  as  wholly  incapacitated  for  labor; 
8.4  per  cent,  as  partially  incapacitated;  12.5  per  cent,  as  able- 
bodied.  In  the  case  of  those  whose  earning  power  had  been 
lost  or  impaired,  sickness  was  assigned  as  a  cause  by  71.6  per 
cent. ;  age  and  infirmity,  by  32.2  per  cent. ;  accident  by  15.4 
per  cent.  The  percentage  of  able-bodied  in  the  entire  pau- 
per population  of  the  country  as  given  in  the  census  returns 
is  nearly  identical  with  that  for  the  aged  pauper  popula- 
tion of  this  State,  namely,  11.7.  The  extremely  small  per- 
centage of  able-bodied  among  the  aged  paupers  is  a  highly 
significant  fact,  and  points  to  the  practical  impossibility  of  re- 
moving any  considerable  proportion  of  this  population  from 


1910.]  HOUSE  — No.  1400.  41 

the    institutions    through    the    establishment    of    a    pension 
system. 

Occupations  and  \Vages  in  Early  Life.  —  The  returns  show 
no  great  preponderance  of  any  particular  class  of  occupations. 
Manufacturing  and  mechanical  pursuits  rank  first,  with  33.7 
per  cent,  of  the  persons  from  whom  returns  were  obtained ; 
housekeeping  and  domestic  service  follow,  with  22.6  per 
cent.;  and  common  labor  stands  third,  with  14.5  per  ceni. 
The  other  occupations  yield  only  small  percentages.  In  the 
pauper  population  of  the  United  States  the  laboring  and  ser- 
vant class  furnishes  the  largest  percentage,  namely,  47.8; 
agriculture,  transportation  and  other  outdoor  pursuits  come 
second,  with  23.7 ;  and  manufacturing  and  mechanical  pur- 
suits third,  with  19. 

The  usual  weekly  earnings  are  given  as  $5  or  less  in  20.4 
per  cent,  of  the  number  of  cases  for  w^hich  information  could 
be  obtained.  The  division  according  to  higher  wage  groups 
is  as  follows :  $5  to  $10,  36  per  cent. ;  $10  to  $15,  29  per  cent. ; 
$15  to  $20,  10.1  per  cent.;  over  $20,  4.5  per  cent.  It  thus 
appears  that  56.4  per  cent,  of  the  aged  paupers  earned  $10  or 
less  weekly  in  early  life.  The  returns  for  last  earnings  before 
admission  naturally  show  some  decline  of  the  proportions  in 
the  higher  wage  groups.  The  percentage  with  earnings  of 
only  $10  or  less  increased  to  71.9  per  cent.  The  division 
according  to  wage  groups  stood:  $5  or  less,  32.6  per  cent.; 
$5  to  $10,  39.3  per  cent. ;  $10  to  $15,  22  per  cent. ;  $15  to  $20, 
4.5  per  cent. ;  over  $20,  1.6  per  cent. 

Property  Holdings  and  Losses  in  Early  Life.  —  The  num- 
ber of  aged  almshouse  inmates  who  had  property  above  debts 
at  some  time  in  life  is  naturally  small,  representing  only  27.4 
per  cent,  of  the  total.  Of  those  holding  property,  the  amount 
owned  was  $500  or  less  in  30.2  per  cent,  of  the  cases;  $500 
to  $1,000,  24.8  per  cent. ;  and  over  $1,000,  45  per  cent.  The 
number  of  property  holders  who  sustained  losses  amounted 
to  97.4  per  cent,  of  the  total  owning  property  at  some  time. 
The  causes  of  loss  are  given  as :  extra  expenses  for  sickness  or 
other  emergency,  64.9  per  cent. ;  business  failure  and  bad  in- 
vestment, 16.7  per  cent.;  intemperance  and  extravagance,  9.3 


42  OLD  AGE   PENSIONS.  [Jan. 

per  cent. ;  fraud,  6.2  per  cent. ;  fire,  2.9  per  cent.  The  high 
percentage  on  account  of  sickness  and  other  emergency  is 
notable. 

Comparative  Pauperism  in  Massachusetts  and  Great  Brit- 
ain. —  A  comparison  of  the  extent  of  almshouse  pauperism 
in  this  State  and  in  Great  Britain  discloses  a  striking  dif- 
ference. The  average  number  of  almshouse  inmates  in  Mas- 
sachusetts during  the  year  1908  may  be  placed  at  9,456. 
In  England  and  Wales  the  total  indoor  pauper  population 
numbers  300,617.  The  number  of  indoor  paupers  per  1,000 
of  the  population  is  2.9  in  Massachusetts,  as  against  8.5  in 
England  and  Wales.  The  number  of  almshouse  inmates  65 
years  of  age  and  over  in  Massachusetts  September  1,  1909, 
was  2,474.  In  the  United  Kingdom  the  number  of  indoor 
paupers  65  years  of  age  and  over  as  enumerated  in  1901  vras 
93,425.  The  number  per  1,000  of  the  population  of  the 
same  age  was  14.2  in  Massachusetts  and  46  in  the  United 
Kingdom.  The  table  on  p.  44  extends  this  comparison  to 
include  the  total  pauper  population  as  well  as  the  indoor 
poor. 


1910.] 


HOUSE  — No.  1400. 


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44 


OLD   AGE   PENSIONS. 


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1910.]  HOUSE  — No.  1400.  45 

5.  Non-dependent  Aged  Poor. 
At  the  opposite  economic  extreme  of  the  almshouse  popula- 
tion is  the  class  of  non-dependent  aged  poor.  The  line  be- 
tween the  dependent  and  the  non-dependent  poor  cannot  be 
drawn  sharply.  It  is  not  to  be  understood  that  no  person 
who  has  received  any  outside  assistance  whatever  has  been 
included  in  this  class  of  non-dependent  aged  poor.  Occa- 
sional aid  from  relatives,  friends  or  neighbors,  or  even  from 
a  church,  society  or  settlement,  has  not  been  considered  to 
constitute  dependency  in  the  proper  sense.  Only  assistance 
received  through  the  regular  channels  of  charity,  public  and 
private,  has  been  taken  into  account  in  determining  the  in- 
clusion of  a  doubtful  case  in  the  non-dependent  class.  The 
instructions  concerning  the  schedule  for  non-dependent  aged 
given  to  agents  of  the  commission  stated :  — 

It  is  to  be  used  for  persons  of  either  sex  65  years  of  age  and 
over  who  are  not  dejjendent  on  charity,  but  who  would  be  entitled 
to  share  in  the  benefits  of  any  system  of  old  age  pensions.  The 
class  of  the  aged  population  which  it  is  designed  to  cover  by  this 
inquiry  includes  aged  members  of  the  working  class  who  stand  above 
the  line  of  dependency,  outside  the  ranks  of  the  pauper  class  and 
charity  beneficiaries,  yet  who  are  in  modest  or  needy  circumstances. 

The  number  of  persons  enumerated  in  this  division  of  the 
investigation  was  3,746,  living  in  more  than  100  cities  and 
towns  in  ten  counties  of  the  State.  The  purpose  of  this  par- 
tial census  was  to  obtain  a  fair  representation  of  the  condi- 
tion of  that  part  of  the  aged  population  which  stands  on  the 
margin  of  dependency.  The  figures  throw  light  on  the  re- 
sources of  the  self-supporting  aged  poor  in  this  Common- 
wealth. 

The  chief  subject  of  interest  in  a  study  of  this  class  of  the 
aged  population  is  its  economic  condition,  as  shown  by  in- 
comes and  expenditures.  Tn  this  investigation  attempt  was 
made  to  obtain  figures  of  weekly  incomes  and  sources  of  in- 
come, and  of  weekly  expenditures  and  objects  of  expenditure. 
In  tabulating  the  returns  the  non-dependent  population  was 
divided  into  four  classes,  in  order  to  give  a  more  definite  indi- 


46  OLD   AGE   PENSIONS.  [Jan. 

cation  of  the  adequacy  of  the  incomes,  namely:  first,  indi- 
vidual males ;  second,  individual  females ;  third,  couples ; 
fourth,  families  of  three  or  more  members.  It  is  obvious  that 
the  adequacy  of  an  income  of  a  given  amount  depends,  in 
the  first  instance,  on  the  number  of  persons  who  must  be  sup- 
ported from  it;  consequently,  the  income  figures  were  tabu- 
lated separately  for  individuals  of  each  sex,  for  groups  of  two, 
and  for  families.  The  figures  for  weekly  incomes  are  shown 
in  the  table  on  the  opposite  page. 

The  striking  fact  shown  by  this  table  is  the  large  per- 
centage of  individuals  having  incomes  below  $5  weekly, 
namely,  39.3  for  men,  79  for  women.  On  the  other  hand, 
the  percentage  of  couples  and  families  having  incomes  of  $10 
and  over  weekly  is  surprisingly  large,  namely,  60.6  for  the 
former,  82.6  for  the  latter.  It  is  further  noticeable  that  the 
percentages  of  those  with  incomes  derived  from  savings  and 
from  pensions  are  much  larger  in  the  case  of  couples  and  fam- 
ilies than  in  the  case  of  individuals.  Of  the  couples,  55.3  per 
cent,  have  incomes  from  savings  and  19.5  per  cent,  from  pen- 
sions ;  for  the  families,  the  corresponding  percentages  are  58.7 
and  32.3,  respectively.  For  individual  females  the  percent- 
ages drop  to  44  with  incomes  from  savings,  and  only  9.4  from 
pensions;  and  for  individual  males,  to  36.1  and  15.5  respec- 
tively. The  couples  and  families  are  clearly  better  provided 
for  than  are  the  individual  males  and  females.  As  one  would 
expect,  the  individuals  show  a  higher  percentage  of  cases 
receiving  aid  from  relatives  than  do  couples  and  families,  the 
percentages  standing  36.1  for  males  and  57  for  females. 


1910.] 


HOUSE  — No.  1400. 


47 


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48 


OLD  AGE   PENSIONS. 


[Jan. 


The  figures  for  expenditures  afford  a  basis  for  judging 
the  adequacy  of  the  incomes,  at  least  in  a  rough  way.  The 
following  table  shows  the  classified  weekly  expenditures :  — 

Weekly  Expenditures  of  Non-dependent  Aged  Poor. 


Total. 


Average 
Weekly 
Expendi- 
tures. 


Classified  Weekly  Expenditures. 


Percent- 
age of  In- 
come 
expended 
for  Rent. 


Percent- 
age of  In- 
come 
expended 
for  Food. 


Percent- 
age of  In- 
come 
expended 

for 
Clothing. 


Individual  males, 
Individual  females, 
Couples, 
Families, 


730 

$6  26 

26.9 

58.1 

1,031 

4  28 

32.4 

54.2 

1,362 

9  32 

23.5 

51.2 

201 

12  00 

25.3 

60.0 

10. 0 

13.0 

9.1 

9.8 


The  high  percentages  of  income  expended  for  rent  and  for 
food  are  notable  features  of  the  classified  expenditures  pre- 
sented in  this  table.  In  the  case  of  individual  females  the 
percentage  of  expenditure  for  rent  is  extremely  high,  namely, 
32.4.  The  reason,  doubtless,  lies  in  the  obvious  fact  that  it 
is  more  difficult  and  expensive  for  a  single  aged  woman  to 
provide  for  herself  adequate  lodging  accommodations  than 
for  a  single  aged  man.  The  percentage  of  expenditure  for 
food  is  especially  high  in  the  case  of  families,  who  spend  60 
per  cent,  of  the  income  for  this  purpose.  The  percentage  of 
expenditure  for  clothing  is  comparatively  low  in  all  cases, 
averaging  about  10  per  cent.  This  is  due  to  the  fact  that 
aged  persons,  as  a  rule,  are  not  called  upon  to  incur  so  heavy 
an  expense  for  this  purpose  as  the  young  and  the  middle-aged. 
The  expenditures  for  the  three  objects  of  rent,  food  and  cloth- 
ing consume  a  very  large  part  of  the  total  income.  The  sur- 
plus expended  for  incidental  purposes  is  much  less  in  the 
case  of  aged  persons  than  in  the  general  population.  The  old 
spend  very  little,  as  a  rule,  for  recreation  and  sundries. 

The  percentages  of  income  expended  for  rent  and  food  by 
aged  families,  as  shown  by  this  investigation,  are  somewhat 
higher  than  the  normal  averages  for  wage  earners'  families. 
The  percentage  of  expenditure  for  clothing,  however,  is  some- 


1910.] 


HOUSE  — No.  1400. 


49 


what  less.  The  comparative  expenditures  of  wage  earners' 
families  in  general,  and  of  families  among  the  non-dependent 
aged  poor,  are  sho^^^l  in  the  following  table :  — 


201  Families 

of  Aged  Poor 

in  Mas.sa- 

chusetts. 

175  Normal 

Familie.s  in 

United 

States.' 

200  Families 

in  New  York 

City.2 

73  Families 

in  New  York 

City  .3 

Average  income,    . 

$687  48 

$800  to  $900 

$851   38 

$800  to  $899 

Average  expenditure  (per 
cent.):  — 
Food,     . 

60.0 

42.80 

43.4 

44.3 

Rent,     . 

25.3 

16.66 

19.4 

20.7 

Clothing, 

9.8 

13.45 

10.6 

14.0 

>  Eighteenth  annual  report  of  United  States  Commissioners  of  Labor,  p.  363. 

-  Louise  B.  More,  "Wage  Earners'  Budgets,"  p.  258. 

'  R.  C.  Chapin,  "Standard  of  Living  in  New  York  City,"  p.  70. 

As  regards  the  adequacy  of  the  incomes,  compared  with 
expenditures,  it  appears  that  51.5  per  cent,  of  the  individual 
males  have  incomes  of  $6  a  week  or  over,  which  would  pro- 
vide approximately  for  the  average  weekly  expenditure  of 
$6.26  for  this  class;  21  per  cent,  of  the  individual  females 
have  incomes  of  $5  a  week  or  over,  which  is  considerably  in 
excess  of  the  $4.28  average  for  expenditures;  72.7  per  cent, 
of  the  couples  have  incomes  of  $9  a  week  or  over,  which 
approximates  the  average  of  $9.32  for  expenditures ;  82.6  per 
cent,  of  families  have  incomes  of  $10  a  week  or  over,  which  is 
close  to  the  standard  of  $12  average  weekly  expenditures. 
The  average  percentage  of  those  who  have  incomes  adequate 
to  meet  the  average  expenditures  is,  for  all  classes,  approxi- 
mately 60  per  cent. 

Other  indications  of  the  economic  condition  of  this  group 
of  the  aged  population  are  the  percentages  of  persons  who 
have  i^roperty  above  debts,  of  those  who  carry  insurance  or 
membership  in  a  union  or  benefit  order,  and  of  the  able- 
bodied.  The  percentage  of  property  holders  for  the  entire 
group  of  non-dependent  aged,  including  individuals,  couples 
and  families,  is  43.4.^  Of  the  number  having  property.  72.5 
per  cent,  give  the  amount  as  $1,000  or  over.     The  percentage 

'  See  p.  75. 


50  OLD   AGE   PENSIONS.  [Jan. 

of  persons  of  this  class  who  carry  insurance  is  not  large,  being 
only  15.9,  The  proportion  of  members  in  unions  and  benefit 
orders  is  still  smaller,  being  10.4  per  cent.  The  percentage 
of  able-bodied  persons  is  53.4.  This  percentage  affords  an 
interesting  contrast  to  the  12,5  per  cent,  of  able-bodied  per- 
sons among  inmates  of  almshouses,  and  the  5.3  per  cent, 
among  inmates  of  benevolent  homes. 

The  average  age  at  which  the  wage-earning  power  was  lost, 
in  the  case  of  those  wholly  incapacitated,  was  found  to  be  68 
years ;  the  age  at  which  the  wage-earning  power  was  im- 
paired, in  the  case  of  those  partially  incapacitated,  was  found 
to  be  64.  These  averages  are  based  on  returns  for  870  and 
872  cases,  respectively.  The  average  ages  of  loss  or  impair- 
ment of  earning  power  as  given  indicate  that  the  normal  pen- 
sionable age,  falling  between  the  limits  of  64  and  68,  is  not 
far  from  65. 

On  the  whole,  the  economic  condition  of  the  non-dependent 
aged  poor,  as  disclosed  in  this  investigation,  is  comparatively 
good.  When  one  considers  that  the  persons  enumerated  be- 
long to  the  group  just  above  the  line  of  dependency,  close  to 
the  pauper  class  and  charity  beneficiaries,  the  facts  that  have 
been  set  forth  acquire  added  significance.  It  is  evident  that 
no  considerable  amount  of  distress  exists  in  the  lower  ranks  of 
the  non-dependent  aged  population. 

The  total  number  of  persons  65  years  of  age  and  over  above 
the  line  of  dependency,  exclusive  of  pensioners,  has  been  esti- 
mated at  135,788.  The  3,746  cases  enumerated  in  the  class 
of  non-dependent  aged  poor  may  be  fairly  regarded  as  consti- 
tuting a  part  of  the  lower  tenth  of  the  non-dependent  aged 
population  in  general.  Tested  by  income,  property  holdings 
or  earning  power,  not  more  than  one-half  of  this  marginal 
population  can  be  set  down  as  actually  needy.  Assuming  that 
to  be  the  proportion  of  persons  in  the  lower  tenth  of  the  non- 
dependent  population  really  entitled  by  virtue  of  their  poverty 
to  share  in  the  benefits  of  any  pension  scheme,  the  number  of 
such  deserving  poor,  or  preferred  candidates  for  pensions, 
would  be,  roundly,  7,000.  If  we  add  the  inmates  of  alms- 
houses, 3,480,  of  benevolent  homes,  2,598,  and  the  recipients 
of  public  outdoor  relief,  3,075,  and  of  private  outdoor  relief. 


1910.]  HOUSE  — No.  1400.  51 

2,312,  we  get  a  total  of  18,465  persons  65  years  of  age  and 
over  who  would  have  to  be  provided  for  in  any  pension  scheme 
that  was  restricted  to  the  deserving  non-dependent  aged  poor 
and  the  beneficiaries -of  public  and  private  charity.  If  the 
public  paupers  were  excluded  from  participation  in  the 
scheme,  the  number  of  prospective  pensioners  would  be  re- 
duced to  about  12,000.  This  number  represents  an  extremely 
low  proportion  of  the  entire  population  65  years  of  age  and 
over,  or  less  than  7  per  cent.  The  figure  is  strikingly  small  in 
contrast  with  the  50  per  cent,  of  the  population  70  years 
of  age  and  over  in  Great  Britain,  that  qualified  for  pen- 
sions under  the  carefully  restrictive  provisions  of  the  old  age 
pension  act. 

6.     Comparative  Social  Statistics  of  Aged  Poor. 

The  two  extreme  classes  of  almshouse  inmates  and  non- 
dependent  aged  poor  have  been  dealt  with  in  preceding  an- 
alyses. Instead  of  proceeding  further  to  treat  each  class  of 
the  aged  poor  separately,  it  will  be  more  instructive  and  illu- 
minating to  adopt  the  comparative  method  of  presenting  each 
set  of  facts  regarding  the  composition  and  condition  of  these 
classes  in  parallel  tables.  This  comparative  presentation  will 
exhibit  side  by  side  the  essential  facts  concerning  the  various 
classes  of  the  aged  poor  gathered  in  this  investigation.  In 
analyzing  the  returns  only  the  salient  features  have  been  se- 
lected for  treatment.  ISTo  attempt  has  been  made  to  exhaust 
the  possibilities  of  statistical  combination  and  permutation. 
The  analysis  has  been  confined  to  the  most  important  and  sug- 
gestive features.  For  convenience  of  arrangement,  the  tables 
are  all  placed  together  at  the  end  of  the  analysis. 

1.  Sex  and  Conjugal  Condition.  —  As  regards  the  sex  of 
the  various  classes  of  aged  poor,  the  most  noticeable  general 
fact  shown  by  Table  1  is  the  inequality  between  the  sexes 
throughout  the  six  classes.  In  this  respect  the  figures  for  the 
aged  poor  present  a  contrast  to  those  for  the  general  popula- 
tion of  the  State,  which  is  divided  between  the  sexes  very 
evenly,  with  48.7  per  cent,  males  and  51.3  per  cent,  females. 
The  lack  of  any  uniformity  in  the  division  between  the  sexes 
in  the  case  of  the  various  classes  is  also  striking.     In  the 


52  OLD   AGE   PENSIONS.  [Jan. 

classes  of  almshouse  inmates,  recipients  of  State  and  military 
aid  and  non-dependent  poor,  the  males  preponderate ;  in  the 
classes  of  inmates  of  benevolent  homes  and  recipients  of  public 
and  private  outdoor  relief,  the  males  are  greatly  outnumbered. 
It  appears  that  relief  in  charitable  institutions  and  in  the 
homes  through  public  or  private  agencies  is  given  more  largely 
to  women  than  to  men. 

In  respect  to  conjugal  condition,  the  small  percentage  of 
single  persons  as  compared  with  the  proportion  in  the  State 
at  large  is  significant.     The  average  of  single  persons  is  only 
15.1  per  cent,  among  the  aged  poor,  whereas  in  the  general 
population  of  the  State  it  is  55.54  per  cent.     It  is  evident 
that  the  heavier  burdens  imposed  by  family  life  contribute 
something  toward  the  volume  of  poverty  in  the  State.     An- 
other noteworthy  fact  here  is  the  high  percentage  of  widowed 
in  all  classes,  the  average  being  52. Y.     The  corresponding 
percentage  for  the  general  population  of  the  State  is  only  6.36. 
The  percentage  of  widowed  is  lowest  among  the  non-dependent 
poor  and  highest  in  the  population  of  benevolent  homes,  with 
the  almshouse  class  coming  second.     It  is  evident  from  the 
figures  that  widowhood  plays  a  large  part  in  producing  and 
aggravating  poverty  in  old  age.     Finally,  the  comparatively 
small  percentage  of  married  among  the  institutional  poor  both 
in  almshouses  and  in  benevolent  homes  is  significant.     The 
percentages  here,  which  are  only  15.4:  and  11.7,  respectively, 
contrast  strongly  with  the  percentages  of  widowed  in  the  two 
classes,  which  are  57.8  and  G0.3,  respectively.     One  would 
naturally  expect  that  the  institutions,  as  the  figures  show, 
would  be  inhabited  mainly  by  Avidowed  persons,  rather  than 
married.     The  latter  make  up  a  higher  percentage  of  the  non- 
institutional  poor,  including  persons  aided  in  their  homes, 
than  of  the  institutional  poor. 

2.  Length  of  Residence  in  Massachusetts.  —  As  in  the 
almshouse  population,  the  percentage  of  persons  who  have 
lived  in  the  State  under  five  years  is  very  small  throughout 
the  classes,  the  average  for  all,  as  shown  in  Table  2,  being  .8. 
Only  for  the  non-dependent  class  does  the  percentage  of  resi- 
dents of  less  than  five  years  rise  above  1,  and  then  only  only  to 
1.1.     In  the  general  population  of  the  State  the  percentage  of 


1910.]  HOUSE  — No.  1400.  63 

persons  with  five  years  or  less  residence  is  25.17.  The  other 
fact  noted  in  the  ease  of  the  almshouse  population,  namely, 
the  high  percentage  of  persons  who  have  resided  in  the  State 
thirty  years  and  over,  is  also  conspicuous  in  this  table.  The 
average  percentage  for  all  six  classes  is  84.2.  In  general,  the 
aged  poor  are  long-term  residents  of  the  State.  There  is  no 
considerable  divergence  from  this  condition  in  any  class. 

3.  Family  Connections.  —  The  proportion  of  inmates  of 
almshouses  and  of  benevolent  homes  having  adult  children  liv- 
ing at  the  time  of  entrance,  as  shown  in  Table  3,  is  nearly  the 
same,  being  43.7  per  cent,  for  the  former  and  39.4  per  cent, 
for  the  latter.  The  percentage  of  non-institutional  poor  both 
public  and  private,  having  adult  children  living  at  the  present 
time,  is  higher,  standing  at  approximately  60.  There  is  a 
wider  difference  between  the  percentages  of  those  having  other 
near  relatives  living  at  the  time  of  entrance  for  the  almshouse 
and  the  benevolent  home  population,  the  percentage  for  the 
former  being  only  52.9,  while  that  for  the  latter  is  64.2. 
Among  the  non-institutional  poor  the  percentages  of  those 
having  other  near  relatives  now  living  are  57.4  for  the  public 
dependents  and  71.9  for  the  private.  The  number  of  alms- 
house and  benevolent  home  inmates  having  adult  children  or 
near  relatives  who  are  able  to  aid  them  at  present  is,  as  one 
would  infer,  very  small,  namely,  7.7  per  cent,  for  the  alms- 
house class  and  13.2  per  cent,  for  the  benevolent  homes.  Here 
the  percentages  are  much  liigher  for  the  non-institutional 
poor,  being  46.4  for  the  recipients  of  public  relief  and  57.5 
for  recipients  of  private  relief. 

J^.  Native-born  and  Foreign-horn.  —  The  percentage  of  for- 
eien-born,  as  shown  in  Table  4,  is  hishest  in  the  almshouse 
population,  namely,  00.5  ;  and  next  highest  among  the  outdoor 
paupers,  namely,  55.3.  The  class  of  non-dependent  poor 
stands  third,  with  43.7  per  cent.  These  three  classes  have 
percentages  exceeding  that  in  the  general  population  of  the 
State,  which  is  30.6.  The  other  three  classes,  the  inmates  of 
benevolent  homes,  the  recipients  of  private  outdoor  relief,  and 
the  beneficiaries  of  State  and  military  aid,  have  much  lower 
percentages  than  that  for  the  State,  The  percentage  of  the 
native-born  of  foreign  parentage  is  also  highest  among  the 


54  OLD  AGE   PENSIONS.  [Jan. 

almshouse  inmates,  namely,  11.8.  Here,  again,  the  outdoor 
paupers  come  next,  with  5.1  per  cent.  The  percentage  of 
the  native-born,  who  were  born  in  Massachusetts,  is  only  13.1 
for  the  almshouse  population.  At  the  other  extreme,  here, 
stands  the  class  of  non-dependent  poor,  among  whom  60  per 
cent,  of  the  native-born  were  born  in  Massachusetts.  Even 
this  percentage  is  much  below  that  for  the  general  population 
of  the  State,  which  is  80.  It  thus  appears  that  the  native- 
born  of  Massachusetts  origin  contribute  a  much  lower  propor- 
tion of  the  aged  dependents  than  they  do  of  the  total  popula- 
tion of  the  State. 

5.  Country  of  Birth  of  Foreign-horn.  —  Comparing  the  va- 
rious countries  represented  among  the  foreign-born,  as  shown 
in  Table  5,  we  find  that  Ireland  leads,  with  a  general  average 
of  60.4  per  cent. ;  Canada  stands  second,  with  18.3  per  cent. ; 
England  and  Wales  follow,  with  10.3  per  cent.  In  each  of 
the  six  classes,  moreover,  Ireland  is  first,  with  percentages 
ranging  from  33.3  to  70.5  ;  Canada  is  second,  with  percentages 
from  11.4  to  28.5,  except  in  the  case  of  the  State  and  military 
aid  group,  in  which  it  is  third ;  England  and  Wales  stand 
third,  with  percentages  from  8.7  to  19.7,  except  in  the  State 
and  military  aid  group,  being  second  here.  This  order  of 
precedence  is  the  same  as  in  the  general  population  of  the 
State.  The  newer  nationalities  among  the  foreign-born  — 
that  is,  those  most  heavily  represented  in  recent  immigration, 
including  Italy,  Russia,  Hungary  and  others  —  have  the  most 
insignificant  representation  among  the  aged  poor.  These  peo- 
ples have  not  yet  been  largely  represented  in  this  country  long 
enough  to  figure  conspicuously  in  any  statistics  of  the  aged. 
Germany  has  a  percentage  almost  the  same  as  its  percentage 
in  the  general  population  of  the  State,  the  two  figures  for  the 
aged  poor  and  for  the  general  population  being  3.2  and  3.3, 
respectively. 

6.  Political  Status  of  Foreign-horn  Males.  —  The  returns 
show  that  about  three-quarters  of  the  foreign-born  males 
are  naturalized.  The  percentage  of  naturalized  foreign-born 
males,  as  shown  in  Table  6,  is  highest  among  the  recipients 
of  State  and  military  aid,  namely,  91.6.  For  the  general 
population  of  the  State  the  percentage  of  naturalized  among 


1910.]  HOUSE  — No.  1400.  55 

the  foreign-bom  males  is  only  41.6.  The  lower  percentage 
of  naturalized  in  the  general  foreign-born  population  is  to  be 
explained  by  the  fact  that  there  are  many  minors  and  immi- 
grant newcomers  in  this  class,  while  the  aged  poor  have  as  a 
rule  been  residents  of  the  State  long  enough  to  meet  the  con- 
ditions for  naturalization. 

7.  Defective  Physical  Conditions.  —  The  high  percentage 
of  physical  defectives  among  almshouse  inmates,  namely, 
93.8,  has  been  commented  on.  The  next  highest  percentage, 
as  shown  in  Table  7,  is  86  for  recipients  of  State  and  military 
aid,  the  public  outdoor  poor  following  closely  with  82.7. 
The  figure  for  the  non-dependent  poor  is  conspicuously  low, 
namely,  40.3  per  cent.  The  general  percentage  of  physical 
defectives  for  all  classes  is  72.2.  The  particular  defects  that 
stand  out  most  conspicuously  in  the  table  are:  chronic  dis- 
ease, with  32.4  per  cent,  of  the  total  number  of  defectives; 
age  and  infirmity,  with  26.9  per  cent. ;  and  rheumatism,  with 
23.1  per  cent.  The  percentages  of  feeble-minded  and  insane 
are  low ;  even  the  institutional  population  and  the  non-institu- 
tional public  poor  have  only  small  percentages  in  these 
classes.  The  provision  for  the  insane  in  separate  institutions 
of  course  accounts  for  this  meager  representation. 

8.  Earning  Power.  —  With  reference  to  the  ability  to 
work,  the  extremely  low  percentage  of  12.5  able-bodied  among 
the  almshouse  inmates  has  previously  been  pointed  out.  The 
percentage  of  able-bodied  in  benevolent  homes,  as  shown  in 
Table  8,  is  even  lower,  5.3.  For  the  non-institutional  poor, 
also,  the  percentage  of  able-bodied  is  very  low,  being  12.9  for 
recipients  of  public  relief  and  9.8  for  private  relief.  In  the 
class  of  State  and  military  aid  the  percentage  rises,  slightly, 
to  16.  In  the  group  of  non-dependent  poor  it  is  compara- 
tively high,  namely,  53.4.  The  wholly  incapacitated,  at  the 
opposite  extreme  of  earning  power,  show  very  high  percent- 
ages in  all  classes,  with  the  exception  of  the  non-dependent 
poor,  who  have  only  23.3.  The  highest  percentage  is  85.2  for 
inmates  of  benevolent  homes.  The  figures  for  causes  of  loss 
or  impairment  of  earning  power  bring  out  no  remarkable  vari- 
ations among  the  different  classes.  Among  the  three  causes 
tabulated,  sickness  has  the  high  average  of  71.6  per  cent.; 


56  OLD   AGE   PENSIONS.  [Jan. 

old  age  coming  second,  with  27.2  per  cent. ;  and  accident  third, 
with  only  13.4  per  cent.  The  well-known  fact  that  sickness  is 
prodnctive  of  poverty  and  dependency  is  strongly  emphasized 
by  these  figures. 

9.  Occupations.  —  The  figures  given  in  Table  9  for  in- 
mates of  almshouses  and  benevolent  homes  relate  to  occupa- 
tions early  in  life.  In  the  general  average  for  occupations, 
manufacturing  and  mechanical  pursuits  head  the  list,  with 
29.7  per  cent.,  closely  followed  by  housekeeping  and  domestic 
employment,  with  28.1  per  cent.  These  two  occupations  stand 
either  first  or  second  in  each  class  of  the  aged  poor.  The  high 
percentage  for  housekeeping  and  domestic  employment  is  ac- 
counted for  by  the  fact  that  many  women  are  represented  in 
the  returns.  Common  labor  has  the  third  largest  representa- 
tion among  occupations,  9.2  per  cent.  The  remainder  of  the 
total  is  scattered  among  the  other  occupations,  no  one  showing 
a  notable  percentage  except  agriculture,  with  9.5  for  State 
and  military  aid  and  7.2  for  non-dependent  poor. 

10.  Weehly  Wages.  —  The  usual  earnings  given  in  Table 
10  are  the  weekly  amounts  ordinarily  or  normally  earned  by 
the  person  when  working  at  his  main  occupation.     The  pres- 
ent or  last  earnings  are  the  weekly  amounts  received  at  the 
present  time,  or  when  the  person  was  last  employed.     The 
returns  for  the  inmates  of  almshouses  and  benevolent  homes 
are  for  the  earnings  before  admission  to  the  institution.     The 
general  average  in  the  low  wage  group  of  $5  or  less  is  18.1 
per  cent.     The  non-institutional  poor  are  heavily  represented 
in  this  group,  with  37.6  per  cent,  for  the  public  beneficiaries 
and  24.7  per  cent,  for  the  private  beneficiaries.     The  general 
average  in  the  middle  wage  group,  $5  to  $10,  is  32  per  cent., 
the  highest  percentage  here  being  that  for  State  and  military 
aid,  43.2,  and  the  lowest  that  for  the  non-dependent  poor,  23.1. 
The  combined  percentages  for  the  two  wage  groups  under 
$10  is  50.1.     The  percentage  above  the  $10  line  is  49.9. 
This  means  that  almost  exactly  one-half  of  the  aged  poor 
earned  $10  or  over  a  week  when  employed  at  their  ordinary 
occupations.     The  percentage  with  earnings  in  excess  of  $20 
a  week  is  naturally  small,  the  average  being  2.9. 

The  figures  for  earnings  at  the  present  or  last  employment 


1910.]  HOUSE  — No.  1400.  57 

show  a  very  different  distribution  among  the  wage  groups. 
In  this  table  only  31,3  per  cent,  are  found  above  the  $10  line, 
as  contrasted  with  49.9  per  cent,  in  the  usual  earnings.  The 
percentage  in  the  lowest  group  is  nearly  twice  as  much  as 
that  for  the  usual  earnings,  namely,  31.6;  and  that  in  the 
second  group  is  37.1,  which  is  5  per  cent,  more  than  for  this 
group  in  the  usual  earnings. 

11.  Property  Holdings.  —  The  percentage  of  those  having 
property  above  debts  at  any  time,  as  shown  in  Table  11,  is 
for  all  classes  37.9.     The  highest  percentage  here  is  for  the 
recipients  of  private  outdoor  relief,  which  is  59.4.     It  is  a 
surprising  fact  that  the  percentage  for  this  class  is  consider- 
ably higher  than  that  for  the  non-dependent  poor,  who  have 
only   48.2   per   cent,    of   property   holders.      The   extremely 
high  percentage  for  the  recipients  of  private  outdoor  relief 
may  be  explained  by  the  fact  that  many  persons  who  have 
been  well-to-do  earlier  in  life,  but  have  been  reduced  to  de- 
pendency through  misfortune,  are  found  in  this  class  of  de- 
pendents.    In  respect  to  the  amount  of  property  holdings, 
it  appears  that  more  than  one-half,  or  53.9  per  cent,  of  the 
property  holders,  owned  over  $1,000.    The  percentages  in  the 
first  and  second  groups  —  owning  $500  or  less  and  $500  to 
$1,000  —  are  nearly  the  same,  being  23.3  and  22.8,  respec- 
tively.    The  percentage   in  the   third  group,  those  owning 
over  $1,000,  is  highest  for  the  non-dependent  poor,  namely, 
74.8.     The  recipients  of  private  outdoor  relief  and  the  in- 
mates of  benevolent  homes  also  have  high  percentages  in  this 
group,  65.8  and  63.3,  respectively.     The  average  amount  of 
property  per  capita  of  the  whole  number  of  property  holders 
ranges  from  $573.91  for  State  and  military  aid  to  $6,514.17 
for  private  outdoor  relief. 

12.  Property  Losses.  —  The  percentage  of  property  hold- 
ers who  sustained  losses,  as  shown  in  Table  12,  is  56.1.  The 
almshouse  inmates  have  the  highest  percentage  of  losers, 
namely,  97.4;  the  inmates  of  benevolent  homes  and  the  re- 
cipients of  private  outdoor  relief  follow,  with  90 ;  the  non- 
dependent  poor  have  only  16  per  cent,  of  property  losers. 

Among  the  causes  of  property  loss,  extra  expenses  on  ac- 
count of  sickness  and  emergencies  show  an  average  percentage 


58  OLD   AGE   PENSIONS.  [Jan. 

of  60.1;  business  failures  and  bad  investments  come  second, 
with  25.4;  intemperance  and  extravagance  stand  third,  with 
6.2;  while  fraud  and  fire  claim  5.1  and  3.2,  respectively. 

13.  Present  Financial  Condition.  —  For  obvious  reasons, 
the  almshouse  inmates  do  not  appear  in  Table  13.  The 
figures  for  present  property  holdings  supplement  those  given 
in  the  preceding  tables  for  early  life.  It  appears  that  26,5 
per  cent,  of  the  aged  poor  have  property  at  the  present  time, 
or,  in  the  case  of  the  inmates  of  benevolent  homes,  had  prop- 
erty when  admitted  to  the  institution.  This  figure  should 
be  compared  with  the  37.9  per  cent,  who  had  property  above 
debts  at  some  time  in  life.  Large  ratios  of  decline  appear  in 
the  property  holdings  of  all  classes  except  the  non-dependent 
poor.  The  percentage  of  present  property  holders  in  this 
class  is  43.4,  or  only  slightly  less  than  the  48.2  per  cent,  who 
held  property  at  some  time  in  life.  The  percentage  of  those 
in  the  lowest  property  group,  owning  $500  or  less,  is  nota- 
bly higher  than  in  the  case  of  the  early  property  holdings, 
namely,  34.3;  while  the  percentage  in  the  highest  group, 
those  owning  over  $1,000,  is  much  lower,  namely,  43.9.  Cor- 
responding percentages  for  early  property  holdings  were  23.3 
and  53.9,  respectively.  .  The  only  exception,  again,  is  the 
class  of  the  non-dependent  aged,  for  which  the  percentages 
in  this  table  are  almost  the  same  as  in  the  returns  of  property 
holdings  early  in  life,  the  percentages  being  5.6  in  the  low- 
est group  and  72.5  in  the  highest  group,  as  compared  with  4 
and  74.8,  respectively,  in  the  preceding  tabulation. 

The  percentages  of  those  who  carry  life  insurance  are  com- 
paratively small,  the  highest  being  16.5  for  recipients  of 
public  outdoor  relief,  and  15.9  for  the  non-dependent  poor. 
Membership  in  trade  unions  or  benefit  orders  has  only  insig- 
nificant percentages  in  the  first  three  classes ;  with  18.1  and 

10.4,  respectively,  in  the  cases  of  State  and  military  aid  and 
non-dependent  poor.  As  regards  financial  assistance  by  rel- 
atives, the  recipients  of  outdoor  relief,  public  and  private, 
naturally  show  the  highest  percentages,  namely,   40.2   and 

40.5,  respectively. 


1910.] 


HOUSE  — No.  1400. 


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HOUSE  — No.  1400. 


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HOUSE  — No.  1400. 


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HOUSE  — No.  1400. 


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1910.1  HOUSE  — No.  1400.  77 


III. 

DESCRIPTIVE  ACCOUNT  OF  EXISTING  SYS- 
TEMS OF  OLD  AGE  PENSIONS,  INSUR- 
ANCE AND  ANNUITIES. 


1.     Origin  of  the  Problem. 

The  problem  of  old  age  pensions  or  insurance  is  of  mod- 
ern origin.  It  is  one  of  the  questions  of  social  readjustment 
consequent  upon  the  industrial  revolution.  Before  the  era  of 
the  factory  system  this  problem  hardly  existed.  In  the  earlier 
period,  as  Carlisle  has  impressed  upon  us,  the  economic  re- 
lations between  men  were  of  a  permanent  character.  The 
labor  contract  was  life-long.  The  worker  lived  under  the 
paternal  protection  of  the  master,  who  felt  obliged  to  provide 
for  him  in  sickness,  accident  and  old  age.  He  was  not  ex- 
pected to  make  independent  provision  for  the  emergencies 
of  life.  In  the  background,  moreover,  stood  the  Church, 
ready  to  dispense  alms  with  a  free  hand. 

The  industrial  revolution  changed  all  this.  Temporary 
contract  took  the  place  of  permanent  service.  The  employer 
recognized  no  obligation  to  support  the  worker  throughout 
life.  The  latter  was  thrown  upon  his  own  resources,  and 
was  expected  to  take  care  of  himself  in  periods  of  infirmity, 
misfortune  and  old  age.  Thus  arose  the  problem  of  old  age 
pensions  or  insurance,  which,  in  essence,  is  the  problem  of  de- 
vising an  effective  system  of  providing  for  the  old  age  of 
worn-out  workers. 

During  the  last  generation  a  widespread  interest  has  de- 
veloped in  this  problem.  This  interest  has  been  prompted 
by  two  classes  of  motives,  —  humanitarian  and  economic. 
The  uppermost  consideration  in  the  minds  of  the  men  who 
first  turned  public  attention  to  this  question  was  the  desire 
to  reduce  the  volume  of  human  misery.     They  were  shocked 


78  OLD   AGE   PENSIONS.  [Jan. 

by  the  extent  of  old  age  pauperism.  They  proposed  that  a 
system  of  old  age  pensions  be  established,  as  a  means  of  tak- 
ing aged  workers  out  of  the  almshouses  and  enabling  them 
to  spend  their  last  years  in  self-respecting  comfort.  This  hu- 
manitarian motive  has  been  reinforced  by  an  economic  ob- 
ject. It  has  been  recognized  that  the  aged  worker  is  a  bur- 
den on  industry.  His  retention  in  active  employment,  after 
he  has  passed  the  limit  of  his  efficiency,  means  economic 
waste.  A  system  of  old  age  pensions  has  therefore  been  ad- 
vocated as  a  means  of  retiring  workers  at  a  reasonable  age, 
and  removing  this  handicap  on  industry. 

In  the  field  of  legislation  on  this  question  Germany  led 
the  way  in  1889,  when  the  first  old  age  and  invalidity  in- 
surance was  passed  by  the  Imperial  Parliament.  Denmark 
followed  this  example  in  1891.  Then  three  of  the  Austra- 
lasian colonies  of  Great  Britain  established  old  age  pensions 
systems,  —  New  Zealand  in  1898,  New  South  Wales  in  1900 
and  Victoria  in  1901.  Belgium  introduced  a  system  of  old 
age  insurance  and  pensions  in  1900.  France  and  Italy  also 
have  adopted  special  measures  for  old  age  relief.  In  1908 
the  Commonwealth  of  Australia  enacted  an  invalidity  and 
old  age  pension  law  on  June  10,  to  go  into  effect  July  1, 
1909 ;  the  Canadian  Parliament  passed  an  act  providing  for 
the  issue  of  government  annuities  of  old  age  on  July  20 ; 
and  England  adopted  the  old  age  pension  act  on  August  1, 
to  go  into  effect  January  1,  1909.  Projects  of  old  age  in- 
surance have  been  under  parliamentary  consideration  in  Aus- 
tria, Norway  and  other  European  States. 

No  American  State  thus  far  has  established  any  general 
system  of  old  age  pensions  or  insurance.  There  are  in  opera- 
tion in  several  States  special  pension  schemes  for  certain 
classes  of  public  employees,  chiefly  policemen,  firemen  and 
school  teachers.  There  is  no  scheme  now  in  existence,  or 
in  prospect,  making  general  provision  for  old  age  pensions 
or  insurance.  Indeed,  Massachusetts  is  the  first  State  to  au- 
thorize a  comprehensive  inquiry  into  the  pension  and  insur- 
ance question  through  a  State  commission.  In  1905,  to  be 
sure,  the  Legislature  of  Illinois  created  a  commission  to  in- 
vestigate and  report  to  the  Governor  the  draft  of  a  bill  pro- 


1910.]  HOUSE  — No.  1400.  79 

viding  a  plan  for  industrial  insurance  and  workingmen's  old 
age  pensions.  This  commission,  however,  limited  its  inves- 
tigation to  the  subject  of  accident  insurance  of  employees, 
leaving  the  question  of  old  age  pensions  untouched.  Thus 
in  the  United  States  the  question  has  hardly,  as  yet,  received 
any  serious  attention  from  Legislatures,  while  in  Europe  it 
has  been  a  subject  of  repeated  investigation  and  extensive 
legislation. 

Although  American  Legislatures  have  not  dealt  with  this 
question,  American  railroad  and  industrial  corporations  have 
been  establishing  retirement  systems  of  their  own.  This 
movement  began  in  1884,  when  the  Baltimore  &  Ohio  Rail- 
road established  its  pension  system,  and  during  the  last  dec- 
ade it  has  spread  rapidly.  Not  only  railroad  and  industrial 
corporations,  but  street  railroad  companies,  banks  and  mer- 
cantile establishments,  have  instituted  retirement  systems  for 
their  employees. 

At  the  same  time  there  has  been  a  steady  development  of 
industrial  insurance.  The  fraternal  organizations  and  the 
trade  unions  have  contributed  also  some  share  toward  the 
solution  of  this  problem.  The  pension  systems  for  certain 
Ijranches  of  public  service,  to  which  reference  has  already 
been  made,  have  assisted  further  toward  this  end. 

The  first  task  of  an  investigator  in  this  field  is  to  examine 
the  legislative  measures  and  the  various  agencies  which  have 
thus  been  put  into  operation  in  the  effort  to  solve  the  problem 
of  old  age  pensions  and  insurance. 

2.  Old  Age^  Pension  Systems  in  Foreign  Countries. 
The  following  outline  of  old  age  pension  and  insurance 
laws  in  foreign  countries  covers  the  States  that  have  enacted 
such  legislation  up  to  the  present  time.  In  Norway  and 
Sweden  the  question  of  adopting  some  pension  or  insurance 
scheme  has  been  investigated  recently  by  public  commis- 
sions, and  it  is  not  unlikely  that  parliamentary  action  will  be 
taken  in  the  near  future.  Further  legislation  on  this  sub- 
ject is  contemplated,  also,  in  Denmark  and  France.  So  far 
as  existing  legislation  at  this  date  is  concerned,  the  following 
sketch  is  believed  to  be  complete. 


80  OLD   AGE   PENSIONS.  [Jan. 

(a)     Germany. 

The  first  German  old  age  and  invalidity  insurance  law 
was  passed  in  1889,  and  supplementary  legislation  was  en- 
acted in  1891.  In  1899  a  new  act  was  passed,  making  im- 
portant modifications  of  the  old  age  insurance  provisions. 
The  old  age  insurance,  as  now  provided  under  the  amended 
law,  is  a  part  of  a  comprehensive  system  of  insurance  legis- 
lation covering  sickness,  accident  and  invalidity,  as  well  as 
old  age.  In  their  origin  the  German  insurance  laws  were 
an  indirect  result  of  the  Social-Democratic  agitation  which 
began  in  Germany  in  1863.  Under  the  leadership  of  Bis- 
marck the  government  adopted  a  policy  of  progressive  social 
reform,  designed  to  allay  the  discontent  of  the  working  class. 
A  main  feature  of  this  policy  was  the  elaborate  scheme  of 
workingmen's  insurance,  initiated  by  the  sickness  insurance 
act  of  1883,  extended  by  the  accident  insurance  law  of  1884, 
and  tentatively  rounded  out  by  the  old  age  and  invalidity 
insurance  act  of  1889.  Thus  the  German  old  age  insurance 
is  a  part  of  a  system  of  social  insurance  devised  by  Bismarck, 
as  one  means  of  combating  the  spread  of  Social-Democracy. 

The  old  age  insurance,  as  organized  and  administered 
under  the  act  of  1899,  is  obligatory  upon  the  following 
classes :  — 

1.  Persons  employed  as  laborers,  journeymen,  assistants,  appren- 
tices, or  domestic  servants  earning  wages  or  salary. 

2.  Managing  officials,  foremen  and  technical  workers,  clerks  and 
apprentices  in  business  houses,  other  employees  whose  service  or 
employment  forms  their  principal  vocation,  such  as  teachers  and 
tutors,  and  all  persons  receiving  wages  or  salary,  if  their  annual 
earnings  do  not  exceed  2,000  marks   ($500). 

3.  Persons  employed  for  wages  or  salaiy  as  crews  of  German 
vessels  and  ship  captains,  whose  earnings  do  not  exceed  2,000  marks 
($500). 

The  right  to  insure  voluntarily  under  the  act  is  granted 
to  these  classes :  — 

1.  Superintendents  of  works,  foremen,  men  with  technical  edu- 
cation, business  assistants,  teachers  and  tutors,  ship  captains,   and 


1910.  HOUSE  — No.  1400.  81 

other  employed  pei-sons  whose  annual  earnino-s  exceed  2,000  marks 
($500),  but  do  not  exceed  3,000  marks  ($750). 

2.  Traders  and  manufacturers  who  do  not  regularly  employ  more 
than  two  Avorkmen,  liable  to  hisuranee,  as  well  as  all  persons  en- 
gaged in  home  industries  and  not  subject  to  the  insurance  obligation. 

3.  Persons  who  receive  only  board  and  lodging  in  return  for  their 
labor,  or  are  exempt  from  compulsory  insurance  because  their  em- 
ployment is  only  temporary. 

The  employer  is  held  responsible  for  the  insurance  of  all 
workmen  employed  by  him,  and  for  the  payment  of  the  pre- 
miums, being  authorized  to  deduct  the  workman's  share  of 
the  premium  from  his  wages. 

The  number  of  persons  insured  under  this  law  at  the  pres- 
ent time  is  about  14,000,000,  out  of  a  total  population  of 
over  60,000,000. 

The  oblioation  to  insure  begins  with  the  seventeenth  year. 
The  old  age  pension  is  granted  at  the  completion  of  the  seven- 
tieth year,  without  proof  of  disability;  but  the  insured  per- 
son must  have  paid  weekly  contributions  for  twelve  hundred 
weeks.  1     The  expenses  of  the  insurance  are  borne  jointly  by 
empire,  employers  and  employed.     The  empire  contributes 
to  each  annuity  the  fixed  sum  of  50  marks  ($11.90)  per  an- 
num.    The  government  also  bears  the  expenses  of  the  im- 
perial insurance  department,  and  of  the  payment  of  pensions 
through  the  post-offices.     The  employer  attends  to  the  pay- 
ment of  the  contributions,  purchasing  insurance  stamps  at  the 
local  insurance  offices,  and  affixing  them  to  receipt  cards  car- 
ried by  the  insured.     The  rest  of  the  burden  is  divided  in 
equal  shares  between  employer  and  employed.     For  purposes 
of  administering  the  old  age  insurance,  the  employed  are  di- 
vidcl   into  five  wage  classes.-     The  amount  of  the  weekly 
premium,  one-half  of  which  is  paid  by  the  employer  and  one- 
half  by  the  insured,  and  the  amount  of  the  pension,  vary  ac- 
cording to  the  wage  class.     The  pension  is  made  up  of  two 
parts,  namely:  first,  the  fixed  sum  granted  by  the  imperial 
government;  second,  an  additional  amount  according  to  the 
wage  class  of  the  pensioner. 

>  In  the  first  act  the  contributory  period  w.as  fixed  at  fourteen  hundred  and  ten  weeks. 
^  There  were  only  four  classes  under  the  first  law. 


82 


OLD   AGE   PENSIONS. 


[Jan. 


The  following  table  shows  the  five  wage  classes  as  deter- 
mined by  total  annual  earnings,  the  amount  of  pension  pay- 
able in  each  class,  and  the  weekly  contribution  required :  — 


Wage  Class. 

Total 
Pension 
Payable. 

Weekly 
Premium. 

I.   Less  than  350  marks  ($87 .50) 

II.   Between  350  and  550  marks  ($137.50),  . 
III.   Between  550  and  850  marks  ($212.50),  . 
IV.  Between  850  and  1,150  marks  ($287.50), 

V.   More  than  1,150  marks,           ..... 

110  marks 

($27.50). 
140  marks 

($35). 

170  marks 

($42.50). 

200  marks 

($50). 

230  marks 

($57.50). 

14  pfennige 

(3i  cents). 
20  pfennige 

(5  cents). 
24  pfennige 

(6  cents). 
30  pfennige 

(74  cents). 
36  pfennige 

(9  cents). 

The  administration  of  the  law  is  under  the  direction  of  a 
central  imperial  insurance  department,  with  thirty-one  sub- 
ordinate insurance  offices.  The  latter  have  charge  of  the 
insurance  districts  into  which  Germany  has  been  divided. 
Acting  under  the  district  insurance  offices,  there  are  special 
pension  offices  for  the  smaller  political  areas.  Several  boards 
of  arbitration  are  attached  to  each  insurance  office,  each  board 
consisting  of  a  president  and  a  vice-president,  two  repre- 
sentatives of  the  employers  and  two  of  the  employed.  These 
boards  adjudicate  cases  in  dispute.  Appeals  are  allowed 
from  the  boards  to  the  central  imperial  insurance  depart- 
ment, whose  decision  in  all  cases  is  final. 

The  following  table  gives  the  figures  showing  the  scope 
and  the  cost  of  old  age  and  invalidity  insurance  for  the  year 
1907 ;  it  is  impossible  to  obtain  from  the  official  reports  the 
figures  for  old  age  insurance  alone,  apart  from  the  invalidity 
insurance :  — 


1.  Number  of  persons  insured,    .  .  .          . 

2.  Number  of  old  age  pensioners, 

3.  Number  of  invalidity  pensioners,  . 

4.  Receipts  from  all  sources,       .  .  .          . 

5.  Total  expenses,     ...... 

6.  Contributions  from  employers  and  employees, 

7.  Total  amount  paid  in  pensions  and  annuities. 


.     14,000,000 

116,887 

841,992 

226,171,349.39  marks 

($56,542,837.34) 

129,357,294.83  marks 

($32,339,323 .  70) 

163,457,590.09  marks 

(.$40,864,397.52) 

147,593,319.83  marks 

($36,898,329.95) 


1910.]  HOUSE  — No.  1-100.  83 

8.  Share  of  this  sum  paid  out  of  the  imperial  treasury,       49,392,036 .  35  marks 

($12,348,009.08) 

9.  Average  amount  of  pension,  ......      160  marks 

($40) 


The  effect  of  the  compulsory  insurance  system  on  the  ex- 
tent of  pauperism  and  the  expenditure  for  relief  in  Germany 
cannot  be  statistically  determined.  Whether  the  establish- 
ment of  the  system  has  been  followed  by  a  diminution  of  pau- 
perism and  a  reduction  of  the  financial  burden,  or  the  reverse, 
has  been  much  discussed.  The  question  has  been  considered 
thorouo-hlv  bv  Prof.  Henrv  W.  Farnam,  of  Yale  Univer- 
sity,  in  a  paper  on  the  Psychology  of  German  Workmen's 
Insurance.^  The  general  conclusion  of  Professor  Farnam, 
based  on  examination  of  such  statistical  data  and  other  in- 
formation as  can  be  obtained,  is  that  the  burden  of  poor  relief 
has  not  been  diminished  in  consequence  of  the  insurance 
laws.     He  writes  as  follows :  — 

While  it  was  not  announced  as  one  of  the  objects  of  the  govern- 
ment insurance  to  diminish  the  amount  spent  on  the  poor,  it  Avas 
undoubtedly  expected  that  its  effect  would  be  to  lessen  the  number 
of  paupers.  Investigations  made  into  the  causes  of  poverty  in  Ger- 
many some  yeai-s  ago,  some  of  Avhich  were  made  by  Dr.  Victor 
Boehmert  and  others  by  the  Imperial  Statistical  Bureau,  concur  in 
showing  that  in  the  aggregate  some  75  per  cent,  of  the  cases  of 
pauperism  were  attributed  to  sickness,  accident,  physical  incapacity, 
old  age,  or  death  of  the  bread  winner.  Now,  it  so  happens  tliat  all 
of  these  causes  of  pauperism  are  provided  for  in  workingmen's  in- 
surance, and  if  the  great  mass  of  wage  workers,  who  are  the  ones 
most  liable  on  account  of  their  small  income  to  become  dependent, 
are  forced  to  insure  themselves  against  these  very  contingencies,  and 
in  addition  reap  the  benefit  of  the  contributions  of  their  employers, 
it  would  seem  natural  to  expect  that  fewer  would  become  dependent, 
and  that  gi-adually  insurance  would  take  the  place  of  poor  relief 
for  all  but  vciy  few. 

That  the  question  has  interested  the  authorities  is  seen  in  the  fact 
that  the  Verein  fiir  Armenpflege  has  twice,  in  1895  and  in  1901, 
taken  the  matter  up  for  investigation  and  discussion,  and  that  the 
Imperial  Statistical  Bureau  undertook  in  1894  and  published  in  1897 
an  elaborate  investigation  into  the  whole  subject.     It  obtained  its 

'  See  "Yale  Review,"  1904. 


84  OLD   AGE   PENSIONS.  [Jan. 

material  mainly  in  answers  to  the  following  five  specific  questions, 
which  it  addressed  to  the  officials  in  charge  of  poor  relief  through-' 
out  Germany :  — 

A.  Has  the  care  of  the  poor  been  relieved  by  workingmen's  insurance  — 
(a)    Through   sick   insurance? 

(ft)    Through    accident    insurance? 

(c)    Through  old  age  and  invalidity  insurance? 

B.  Has  the  number  of  those  supported  and  the  amount  spent  upon 
them  since  the  introduction  of  the  several  insurance  laws  not  diminished, 
and  to  what  is  this  to  be  attributed? 

C.  Has  the  care  of  the  poor  in  numerous  cases  been  made  supple- 
mentary to  the  benefits  of  workingmen's  insurance  and  provisionally 
substituted  for  themf 

The  answers  received  were  not  complete,  and  it  was  not  possible 
statistically  to  prove  either  an  increase  or  decrease  in  the  total 
amount  spent  upon  the  poor  throughout  the  empire.  I  have,  how- 
ever, tried  to  analyze  the  retui'ns  as  far  as  i^ossible,  and  compared 
my  analysis  with  the  generalizations  published  by  the  Bureau.  As 
regards  the  first  question,  sub-divided  into  three  heads,  which  asks 
whether  the  burden  of  the  poor  has  been  relieved  by  workingmen's 
insurance,  the  official  summary  says  that  "  by  far  the  greater  part  " 
of  the  authorities  questioned  say  that  it  has  been  relieved.  A  care- 
ful count  shows  that  of  the  total  number  of  answers  44  per  cent. 
give  a  simple  affirmative,  while  19  per  cent,  more  give  a  more  or 
less  qualified  affirmative  answer.  Yet,  when  we  come  to  ask  whether 
there  has  been  a  diminution  either  in  the  number  of  paupers  or  in 
the  amount  spent  for  them,  it  appears  that  5S  per  cent,  state  that 
there  has  been  no  such  diminution.  In  other  words,  it  would  appear 
that  in  a  good  many  cases  those  who  say  that  the  burden  of  poor 
relief  has  been  lessened,  mean,  not  that  it  is  absolutely  less  than 
it  formerly  was,  but  that  it  would  have  been  increased  much  more, 
if  it  had  not  been  for  Avorkingmen's  insurance.  "When  we  consider 
that  the  period  under  consideration  has  been  a  period  of  industrial 
prosperity,  commercial  expansion,  external  peace  and  I'ising  wages, 
we  should  naturally  expect  that  the  burden  of  poor  relief  would 
tend  downwards,  as  it  has  been  tending  in  England,'  and  as  out- 
door relief  has  been  tending  in  many  of  our  American  cities  vuider 
good  administration.  If  there  are  no  general  economic  reasons  for 
an  increase  in  the  needs  of  the  poorer  classes  in  Germany,  it  would 
seem  as  if  there  must  be  a  social  or  psychological  reason,  and  there 
are  certainly  strong  indications  of  this.  While  some  officials  speak 
of  depression  in  particular  trades,  the  migration  of  workers  to  the 

1  This  statement  was  made  before  the  recent  increase  of  intloor  pauperism  was  estab- 
lished by  the  investigations  of  the  Royal  Commission  on  the  Poor  Laws.      (See  p.  307.) 


1010.]  HOUSE  — No.  1400.  85 

cities,  etc.,  as  causes  of  the  increased  expenditure,  othei-s  speak  of 
the  tendency  of  the  poor  to  demand  more.  A  report  from  Gotha 
says  that  the  poor  liave  become  accustomed  to  demand  help  from 
the  public.  It  is  elsewhere  stated  that  "  the  shrmking-  from  the 
eleemosynary  character  of  poor  relief  is  disappearino-  among  the 
needy;  those  who  are  not  insured  demand  public  support  more  fre- 
quently than  formerly,  and  even  occasionally  refuse  private  aid. 
Then,  again,  those  who  are  not  insured,  seeing  the  amounts  that  are 
paid  to  tliose  that  are  insured,  demand  a  more  ample  allowance  from 
the  poor  law  authorities,  and  not  infrequently  get  it."  It  also  hap- 
pens here  and  there  that,  when  people  have  been  refused  an  allow- 
ance under  the  insurance  law  for  lack  of  proof,  they  go  to  the  poor 
law  authorities  and  demand  a  larger  sum  on  account  of  their  pre- 
sumjitive  insurance  claim. 

In  a  report  made  to  the  Verein  filr  Armenpflege  und  Wohlthat- 
igkeit  by  Wilhelm  Helling  in  1901  we  learn  some  facts  w^hich  seem 
to  indicate  that  insurance  is  not  having  the  educational  effect  upon 
thrift  that  was  expected.  "  It  is  unfortunate,"  he  says,  "  to  be 
obliged  to  say  that  persons  who  have  established  a  contingent  claim 
upon  the  benefits  of  insurance  by  contributions  find  it  so  difficult 
to  make  up  their  minds  to  maintain  this  claim  by  the  payment  of 
small  voluntary  sums,  and  also  that  hardly  any  use  has  been  made 
of  the  right  of  optional  insurance.  ...  It  is  positively  terrible  to 
notice  the  number  of  women,  who,  when  they  man-y,  give  up  the 
rights  Avhich  they  have  earned  in  order  to  obtain  possession  of  a 
comparatively  small  sum  of  ready  money,  by  having  half  the  sums 
already  paid  refunded  to  them."  Even  where  the  burden  of  poor 
relief  has  been  diminished,  it  has  not  always  fallen  to  an  extent 
equal  to  the  cost  of  insurance  to  the  employers  alone.  Thus,  in  the 
city  of  Konigsberg.  in  spite  of  an  increase  of  20,000  in  the  popula- 
tion during  four  years,  the  expenditure  on  poor  relief  has  actuallj'^ 
diminished:  but,  while  they  do  not  claim  to  have  made  a  saving 
on  this  score  of  more  tiiaii  130,000  marks,  em]iloyers  paid  in  1S96-97 
about  3S0,000  marks,  or  nearly  three  times  this  amount,  as  their 
share  of  the  burdens  of  insurance. 

The  special  investigation  made  by  the  Verein  far  Armenpflege, 
and  reported  upon  by  Dr.  Kichard  Freund  in  1S95,  reaches  con- 
clusions siniilai-  to  those  of  the  ofiicial  investigation.  That  is,  while 
claiming  that  the  agencies  for  the  care  of  the  poor  have  been  greatly 
relieved  by  the  operation  of  the  insurance  laws,  he  acknowledges 
that  the  financial  burden  has  been  considei-ably  increased.  Indeed, 
Dr.  Freund  seems  to  consider  this  in  itself  a  sign  of  progress  which 
is  due  directly  to  tlic  inlluence  of  the  social  laws.  "  It  is  no  mis- 
take," he  says,  "to  assume  that  precisely  the  increased  measure  of 
care  which  has  been  given  to  the  working  classes  by  the  working- 


86  OLD   AGE   PENSIONS.  [Jan. 

men's  insurance  legislation  has  not  been  without  influence  upon  the 
standard  of  living  of  the  naass  of  population,  and  that  this  influence 
is  making  itself  felt  in  poor  relief." 

Recent  data  bearing  on  this  question  of  the  effect  of  the 
compulsory  insurance  system  on  poor  relief  expenditure  have 
been  obtained  by  Mr.  Frederick  L,  Hoffman,  statistician  of 
the  Prudential  Insurance  Company.  In  the  summer  of 
1909  Mr.  Hoffman  visited  Germany  and  studied  the  work- 
ing of  the  compulsory  insurance  laws.  Concerning  the  ef- 
fect on  poor  law  administration,  he  made  inquiries  in  Ber- 
lin, Cologne  and  other  German  cities.  The  burgomaster  of 
Cologne  was  emphatic  in  the  opinion  that  the  insurance  sys- 
tem had  materially  reduced  the  poor  law  expenses  of  that 
city,  if  not  actually,  at  least  relatively.  In  support  of  this 
statement,  he  cited  the  fact  that  during  the  period  1891  to 
1895,  before  the  insurance  laws  had  become  thoroughly  ef- 
fective, the  outdoor  poor  law  expenses  amounted  to  1,756 
marks  per  1,000  inhabitants,  but  had  decreased  to  1,636 
marks  during  the  next  five  years,  1896  to  1900,  and  further 
to  1,611  marks  during  the  succeeding  half  decade,  1901  to 
1905.     Mr.  Hoffman  remarks:  — 

Concerning  the  ever-increasing  demand  for  more  substantial  sup- 
port, of  course  this  decrease  is  of  importance,  but  it  is  hardly  as 
much  as  might  have  been  expected,  considering  the  all-inclusive  char- 
acter of  the  government  insurance  system.  Tor  large  expenditure 
on  account  of  indoor  treatment,  the  city  is  reimbursed  by  the  sick- 
ness and  accident  insurance  institutions,  but  the  statements  are  not 
kept  in  such  detail  as  would  enable  me  to  draw  a  really  definite  con- 
clusion. In  fact,  it  is  candidly  admitted  that  the  statistical  proof 
of  the  value  of  government  insurance  as  a  means  of  reducing  poor 
law  expenses  cannot  be  furnished  except  in  the  case  of  a  few 
localities. 

Later,  Mr.  Hoffman  obtained  additional  data  regarding 
poor  relief  in  Cologne,  which  hardly  sustained  the  contention 
that  government  insurance  had  diminished  pauperism.  The 
per  capita  cost  of  outdoor  poor  support  in  Cologne  increased 
from  5.07  marks  in  1897  to  5.56  marks  in  1902  and  to  6.38 
marks  in  1907.     Since  much  of  the  poor  law  support  comes 


1910.1  HOUSE  — No.  1400.  87 

from  funds  invested  for  that  purpose,  the  net  cost  to  the 
city  was  3.42  marks  per  capita  in  1897,  4.32  marks  in  1902 
and  5,29  marks  in  1907.  Mr.  Hoffman  observes,  however, 
that,  while  the  government  insurance  may  not  have  dimin- 
ished pauperism,  it  has  no  doubt  been  a  check  upon  a  still 
greater  increase  than  has  actually  occurred. 

The  president  of  the  imperial  insurance  office  in  Berlin  is 
quoted  by  Mr.  Hoffman  as  holding  the  opinion  that  a  decided 
and  general  reduction  of  poor  relief,  as  the  result  of  govern- 
ment insurance,  cannot  be  statistically  established.  On  the 
other  hand,  however,  this  official  called  attention  to  the  un- 
deniable fact  that  a  class  which  would  otherwise  have  been 
forced  to  accept  poor  relief  in  illness,  accident  or  old  age,  had 
been  aided  liberally  through  the  insurance  system.  Mr.  Hoff- 
man adds,  in  reference  to  this  opinion :  — 

Still,  a  large  amount  of  poor  relief  is  necessary,  and  the  poor- 
house  has  not  been  abolished,  as  it  has  been  claimed.  Of  course 
it  must  be  kept  in  mind  that  in  Germany  the  system  of  outdoor  re- 
lief has  always  prevailed  much  more  extensively  than  in  England, 
where,  after  the  repeal  of  the  old  poor  law  in  1834,  indoor  treatment, 
or  poorhouse  treatment  proper,  was  made  compulsory,  very  much 
as  with  us  in  fonner  years.  Outdoor  relief  in  Germany,  however, 
has  the  decided  advantage  of  direct  supervision  and  control  through 
carefully  selected  honorai-y  overseei-s,  including  men  of  the  highest 
standing  and  capacity,  who  give  freely  their  time  and  service  as 
a  matter  of  civic  duty  and  civic  pride. 

Finally,  Dr.  Emil  Miiusterberg  of  Berlin,  the  most  emi- 
nent authority  in  Europe  on  the  subject  of  poor  law  admin- 
istration, is  cited  by  Mr.  Hoffman  as  expressing  agreement 
with  the  opinion  that  statistical  evidence  regarding  the  effect 
of  social  insurance  upon  the  very  poor  and  pauper  classes 
cannot  be  produced.     ]\Ir.  Hoffman  observes :  — 

But  it  is  argued  that  it  is  not  the  primary  intent  of  the  insur- 
ance system  to  reach  these  classes,  but  rather  to  conserve  the  eco- 
nomic resources  of  the  real  wage-earning  element  in  industry,  and 
to  keep  this  element  from  becomhig  a  burden  upon  charity  in  sick- 
ness, accident  or  old  age,  rather  than  to  lift  the  very  poor  and 
paupers  out  of  their  poverty. 


88  OLD   AGE   PENSIONS  [Jan. 

The  attitude  of  public  opinion  toward  the  compulsory  in- 
surance laws  is  characterized  by  Mr.  Hoffman  as  favorable. 
He  states :  — 

There  is  much  discontent  with  the  administration  of  the  insurance 
laws,  but  the  system  itself  is  so  well  thought  of  that  repeal  of  the 
laws  is  out  of  the  question.  A  refonn  of  the  system  is  demanded, 
not  only  by  the  social  democrats,  but  also  by  the  government,  and 
a  jjlan  has  been  prepared  which  may  be  considered  by  the  present 
Parliament.  .  .  .  Even  the  best-informed  admit  that  a  really  definite 
and  conclusive  answer  to  many  questions  is  practically  impossible, 
but  there  is  no  dissenting  opinion,  even  on  the  part  of  life  insur- 
ance managers,  that  government  insurance  has  resulted  in  far- 
reaching  reforms,  that  it  has  been  of  vast  benefit  to  the  people  and 
to  the  nation  at  large,  and  that  it  has  come  to  stay.  .  .  . 

The  interests  of  capital  and  labor  have  certainly  been  harmonized 
remarkably  in  Germany,  and,  speaking  from  personal  observation 
extending  over  a  generation,  the  contrast  of  to-day  with  the  past 
is  truly  marvelous.  How  far  government  insurance  has  had  a  share 
in  this  progi'ess  it  is  of  course  impossible  to  say;  but  all  with  whom 
I  have  discussed  the  subject  are  but  of  one  mind,  —  that  the  effect, 
on  the  whole,  has  been  decidedly  for  good.  It  is  admitted  that  the 
system  has  not  brought  industrial  j^eace,  and  that  the  socialists  were 
never  so  powerful  as  they  are  to-day;  it  is  conceded  that  there  is 
much  complaint  and  much  discontent,  but  the  evidence  othei-wise 
is  superabundant  that  the  skilled  German  workman  in  the  large 
cities  is  decidedly  well  off  in  a  material  way,  that  he  is  well  housed, 
well  fed,  and  on  the  whole  well  paid.  German  industry,  however, 
is  not  so  prosperous  as  it  has  been,  and  it  feels  the  burden  of  gov- 
ernment insurance,  and  it  dreads  the  danger  of  still  heavier  burdens 
of  increased  taxation  resulting  from  the  proposed  reform  in  German 
finance  and  the  proposed  refoiTQ  in  the  government  insurance  sys- 
tem. From  the  point  of  view  of  the  employer  of  labor,  it  is  a  most 
serious  risk  to  assume  this  tremendous  burden ;  and,  in  the  words 
of  Dr.  Zacher,  if  one  has  said  A  in  this  matter,  one  must  say 
By  C,  D,  etc.  That  means,  in  other  words,  in  time  the  system  Avill 
be  made  to  include  unemployment  insurance,  widows'  and  orphans' 
pensions,  and  pensions  or  annuities  for  officials  of  semi-public  cor- 
porations; and  in  all  of  this  agitation  there  is  one  unmistakable 
note,  and  that  is,  that,  Avhoever  pays  the  additional  cost,  it  is  not 
to  be  the  beneficiai-y,  or,  in  other  words,  the  workman ;  and  such  a 
doctrine,  of  course,  in  the  end  is  destructive  of  every  i^rinciple  of 
self-reliance  and  self-help. 

In  April,  1909,  the  draft  of  a  new  insurance  law  was  sub- 
mitted bv  the  chancellor  to  the  Bundesrath.     The  bill  in- 


1910.]  HOUSE  — No.  1400.  89 

eludes  1,793  sections,  286  printed  pages,  and  the  explanation 
of  the  text,  which  is  appended,  makes  135  additional  pages. 
The  invalidity  and  old  age  insurance  is  extended  to  include 
adequate  provision  for  dependent  survivors,  in  case  of  death 
of  the  insured.  In  order  to  provide  for  this  additional  in- 
surance, the  rates  of  the  weekly  contributions  are  increased  in 
the  bill,  according  to  the  following  table :  — 


Wage  class  1, 

Wage  class  2, 

Wage  class  3, 

Wage  class  4, 

Wage  class  5, 


from  14  to  16  pfeniiige. 

from  20  to  24  pfennige. 

from  24  to  30  pfennige. 

from  30  to  38  pfennige. 

from  36  to  46  pfennige. 


This  law  codifies  the  existing  statutes,  and  co-ordinates  the 
various  branches  of  insurance  into  a  complete  system  that 
shall  furnish  protection  to  the  workiugman  in  all  the  emer- 
gencies of  life,  except  unemployment. 

(b)     England. 

Postal  Annuities.  —  The  British  postal  insurance  and 
annuity  system  was  established  in  1864.  Before  that  date 
the  National  Debt  Commission  had  the  power  to  issue 
government  life  insurance  in  sums  not  exceeding  £100.  This 
provision  was  not  utilized,  however,  as  it  was  required  that 
any  person  taking  out  insurance  should  also  buy  a  deferred 
annuity  or  age  pension.  In  1864  a  bill  was  introduced  in 
Parliament  authorizing  the  commissioners  to  grant  insur- 
ance with  no  such  condition  attached.  The  outcome  of  the 
discussion  of  this  proposal  was  the  enactment  of  the  postal 
annuities  law  of  1864.  This  measure  was  urged  by  Mr. 
Gladstone  as  a  scheme  for  reducing  the  cost  of  insurance  to 
working  people  below  the  rates  charged  by  the  private  com- 
panies. He  believed  that  the  high  expense  of  industrial 
insurance  could  be  eliminated  by  making  each  post  office  an 
insurance  agency  for  the  issue  of  policies  and  the  payment  of 
premiums. 

The  act  of  1864  authorized  certain  specified  post  offices  to 
undertake  the  business  of  selling  insurance  and  annuities 
under  certain  restrictions.     The  minimum  and  the  maximum 


90  OLD   AGE   PENSIONS.  [Jan. 

limits  of  insurance  were  fixed  at  £20  and  £100,  and  annuities 
at  £4  and  £50  per  annum.  In  practice  the  scheme  did  not 
fulfil  the  expectations  of  its  supporters.  The  wage  earners 
made  comparatively  little  use  of  the  postal  facilities  for  buy- 
ins:  insurance  and  annuities.  In  1882  a  committee  of  the 
House  of  Commons  was  appointed  to  inquire  into  the  working 
of  the  scheme.  This  committee  reported  that  the  system 
had  been  a  comparative  failure,  for  the  following  reasons :  — 

1.  The  absence  of  personal  solicitation  and  collection,  and 
the  necessity  of  visiting  post  offices  for  the  payment  of 
premiums. 

2.  The  limited  number  of  post  offices  available  for  annuity 
and  insurance  business. 

3.  The  maximum  and  minimum  limits  of  amount. 

4.  The  complicated  nature  of  the  formalities  required. 

The  committee  recommended  the  attachment  of  the  insur- 
ance and  annuity  business  to  the  savings  banks,  so  that  agents 
of  the  latter  could  be  used  for  the  payment  of  premiums  and 
the  business  be  transacted  at  every  savings  bank  post  office. 
These  offices  numbered  6,700,  as  against  2,000  post  offices 
then  available  for  the  transaction  of  insurance  and  annu- 
ity business.  Other  recommendations  called  for  increase  of 
the  maximum  and  reduction  of  the  minimum  limit,  sim- 
plification of  procedure,  revision  of  the  tables,  and  other 
changes. 

The  government  annuities  act  of  1882,  adopted  as  a  result 
of  the  investigation,  authorized  the  attachment  of  the  insur- 
ance and  annuity  business  to  the  savings  banks,  fixed  limits 
of  £5  and  £100  for  insurance,  and  of  £1  and  £100  per  annum 
for  annuities,  and  carried  into  effect  other  recommendations 
of  the  committee.  The  rates  were  considerably  reduced  at 
this  time. 

In  June,  1892,  the  postmaster-general  asked  for  authority 
to  employ  school  teachers  as  agents  for  the  postal  insurance 
and  annuity  business.  This  proposal,  together  with  others, 
was  referred  to  an  inter-departmental  committee,  which  sat 
in  1893.  This  committee  did  not  favor  the  plan;  conse- 
quently, it  was  not  adopted.  The  rates  were  reduced,  how- 
ever, and  this  reduction  was  followed  by  a  sudden  increase  of 


1910.]  HOUSE  — No.  1400.  91 

husiness  in  1896.  The  increase  was  only  temporary,  and 
the  business  again  began  to  decline,  both  as  regards  the 
number  of  policies  issued  and  the  amount  of  insurance. 

Finally,  in  1907,  a  departmental  committee  was  appointed 
to  consider  the  question  of  encouraging  the  post  office  insur- 
ance system.  This  committee,  reporting  in  1908,  expressed 
the  opinion  that  it  was  desirable  to  encourage  the  system,  and 
recommended  various  measures  to  this  end,  as  follows :  — 

1.  An  increase  of  the  maximum  amount  of  insurance  to 
£300. 

2.  Provision  for  the  payment  of  premiums  at  quarterly 
intervals,  instead  of  in  annual  instalments. 

3.  Modification  of  the  tables  of  premiums,  to  bring  them 
into  harmony  with  present  requirements. 

4.  Disposal  of  the  surplus  funds  for  the  benefit  of  existing 
insurants. 

5.  Investment  of  the  funds  in  the  most  remunerative 
Parliamentary  securities  obtainable,  instead  of  in  consols,  as 
now  required  by  law. 

G.  Various  measures  to  give  publicity  to  the  system,  and 
thus  promote  wider  utilization  of  its  advantages  by  working 
people. 

7.  Extension  of  the  scheme  through  co-operation  with  the 
friendly  societies. 

The  main  difficulty  from  which  this  scheme  of  voluntary 
insurance  under  State  guarantee  has  suffered  thus  far  appears 
to  be  the  general  disinclination  of  wage  earners  to  take 
advantage  of  any  scheme  that  is  not  forced  upon  their  atten- 
tion by  agents.  The  committee  of  1907  remarked,  in  this 
connection :  — 

We  are  convinced  that  one  of  the  chief  causes  of  the  stagnation 
of  the  system  is  to  be  found  in  the  want  of  publicity  from  which 
it  has  suffered.  We  gather  that  the  very  existence  of  the  system 
is  unknown  to  the  great  bulk  of  the  wage-earning  classes;  and  those 
who  have  heard  of  it  are  very  imperfectly  acquainted  with  its  con- 
venience and  cheapness. 

The  number  of  annuities  issued  through  the  post  offices, 
which  is  the  feature  of  the  system  which  relates  to  old  age 


92  OLD   AGE   PENSIONS.  [Jan. 

insurance  proper,  is  very  small.  During  the  last  ten  years 
the  average  number  of  new  annuity  contracts  issued  has  been 
about  150  per  year,  and  the  total  amount  of  insurance  repre- 
sented has  averaged  only  $15,000  per  year.  As  compared 
with  the  business  done  by  the  private  insurance  companies, 
the  results  of  the  post  office  insurance  system  are  insignificant. 

Old  Age  Pensions.  —  The  enactment  of  the  old  age  pen- 
sions act,  on  August  1,  1908,  to  go  into  effect  January  1, 
1909,  was  the  culmination  of  a  movement  that  began  about 
thirty  years  ago.  The  movement  started  with  the  publica- 
tion of  a  scheme  drawn  up  by  the  Rev.  W.  L.  Blackley,  Hon- 
orable Canon  of  Westminster,  proposing  the  compulsory  in- 
surance of  all  persons,  with  sick  pay  and  superannuation 
allowances  after  the  age  of  70  years.  This  scheme  and 
others  were  investigated  by  a  Select  (parliamentary)  Com- 
mittee on  National  Provident  Insurance,  1885-87,  which  re- 
ported against  the  adoption  of  any  one  of  them.  Since  then 
five  public  commissions  or  committees  have  studied  the  sub- 
ject of  old  age  pensions,  and  have  published  voluminous 
reports.  The  final  outcome  of  the  prolonged  investigation 
and  discussion  is  the  old  age  pension  act  of  1908.^' 

Two  plans,  besides  Canon  Blackley's  scheme  of  compulsory 
assisted  insurance,  early  engaged  the  attention  of  investigat- 
ing commissions.  One  of  these  was  Mr.  Joseph  Chamber- 
lain's plan  of  voluntary  assisted  insurance ;  the  other  was 
Mr.  Charles  Booth's  scheme  of  universal,  non-contributory 
pensions.  None  of  these  proposals  found  much  favor  with 
the  investigating  commissions.  The  first  Royal  Commission 
reported  in  1895  that  it  was  "  unable  to  recommend  the  adop- 
tion of  any  of  the  schemes  as  yet  suggested,"  on  account  of 
financial  and  economic  difficulties.  Similarlv,  the  Commit- 
tee  on  Old  Age  Pensions,  which  reported  in  1898,  found  grave 
objections  to  all  the  plans  and  declined  to  recommend  any. 

A  scheme  radically  different  from  any  before  considered 

■  See  "Report  of  Royal  Commission  on  the  Aged  Poor,"  1893-95,  Lord  Aberdare 
chairman;  "Report  of  Committee  on  Old  Age  Pensions,"  1S96-9S,  Lord  Rothschild 
chairman;  "Report  of  Select  Committee  on  Aged  Deserving  Poor,"  1899,  Mr.  Henry 
Chaplin  chairman;  "  Report  of  Departmental  Committee  on  Aged  Deserving  Poor," 
1899-1900,  Sir  E.  Hamilton  chairman;  "  Report  of  Se!ect  Committee  on  Aged  Pension- 
ers' Bill,"  190.3. 


1910.]  HOUSE  — No.  1400.  93 

was  formulated  bv  the  investigating  Committee  on  Aged 
Deserving  Poor,  1899.  This  committee  reached  the  con- 
clusion that  the  old  age  pensions  ought  to  be  restricted  to  the 
deserving  poor,  and  accordingly  proposed  a  plan  of  limited 
non-contributory  pensions.  Persons  over  05  years  of  age, 
with  incomes  under  12s.^-  weekly  ($3),  who  had  neither  com- 
mitted a  prison  offence  nor  received  poor  relief  within  twenty 
years,  were  to  be  eligible  as  pensioners.  This  plan  was 
worked  over  by  the  two  later  committees,  and  was  finally  laid 
before  Parliament  as  the  government  measure  of  1908. 

The  important  questions  that  were  threshed  out  in  the 
course  of  the  long  debate  over  the  numerous  pension  proposals 
were  these  three :  Should  the  pension  scheme  be  universal,  or 
partial  ?  Should  it  be  compulsory,  or  voluntary  ?  Should  it 
l)e  contributory,  or  non-contributory?  The  scheme  as 
finally  amended  and  adopted  is  partial,  voluntary  and  non- 
contributory.  The  old  age  pension  act  provides  for  the 
payment  of  weekly  pensions,  not  exceeding  5s.  ($1.25),  to 
persons  over  70  years  of  age,  —  except  wastrels,  lunatics, 
paupers  and  criminals,  —  whose  incomes  from  all  sources 
do  not  exceed  £31,  10s.  per  year  ($157.50). 

The  universal  principle  was  rejected,  for  various  reasons. 
The  enormous  cost  was  regarded  as  practically  prohibitive. 
It  seemed  to  the  investigators  and  legislators  absurd,  more- 
over, to  offer  pensions  to  well-to-do  persons  who  had  absolutely 
no  need  of  such  aid.  And,  finally,  the  indiscriminate  grant 
of  pensions  to  paupers  and  workers  was  thought  to  be  danger- 
ous, as  likely  to  discourage  thrift.  The  idea  of  compulsion 
was  abandoned  both  because  of  the  immense  difficulties  in  the 
way  of  its  practical  application,  and  on  account  of  the 
natural  antipathy  to  compulsion  on  the  part  of  the  English 
working  people.  The  contributory  principle  was  given  up 
partly  on  account  of  the  trouble  of  administering  it,  but 
mainly  because  the  theory  had  gained  strong  foothold  among 
the  supporters  of  pension  measures  that  the  members  of  the 
working  class  would  really  contribute  to  the  funds  from 
which  the  pensions  were  paid  in  the  form  of  taxation  and  ser- 

'  For  convenience  of  calculation,  the  shilling  is  estimated  as  equiva'ent  to  SO. 25,  the 
pound  as  equivalent  to  $5.     The  exact  exchange  value  of  the  pound  is  S4.S6. 


94  OLD   AGE   PENSIONS.  [Jan. 

vice  in  the  industrial   army.     Mr.   Lloyd  George   put  this 
view  of  the  case  as  follows :  — 

As  long  as  you  have  taxes  upon  commodities  which  are  consumed 
practically  by  eveiy  family  in  the  eounti-y,  there  is  no  such  thing 
as  a  non-contributory  scheme.  If  you  tax  tea  and  coffee  and  partly 
sugar,  beer  and  tobacco,  you  hit  everybody  one  way  or  another.  In- 
deed, when  a  scheme  is  financed  from  public  funds,  it  is  just  as 
much  a  contributory  scheme  as  one  financed  directly  by  means  of 
contributions  arranged  on  the  German  or  any  other  basis.  Again, 
a  worlcman  who  has  contributed  by  his  strength  and  skill  to  the 
increase  of  the  national  wealth  has  made  his  contribution  to  the  fund 
from  which  his  pension  is  to  come  when  he  is  no  longer  able  to 
work.^ 

Thus,  the  idea  that  faithful  service  in  the  industrial  army 
entitled  the  needy  worker  to  public  maintenance  in  old  age 
was  made  the  basal  principle  of  the  recent  British  legislation. 

The  statutory  conditions  for  the  receipt  of  a  pension 
are :  — 

1.  The  person  must  have  attained  the  age  of  70. 

2.  He  must  satisfy  the  pension  authorities  that  for  at  least  twenty 
years  he  has  been  a  British  subject,  and  has  had  his  residence  in  the     | 
United  Kuigdom. 

3.  His  yearly  means,  as  calculated  under  the  act,  must  not  exceed 
£31,  10s.    ($157.50). 

Aside  from  these  conditions,  certain  disqualifications  are 
laid  down,  namely :  — 

1.  A  person  is  disqualified  for  receiving  or  continuing  to  receive 
an  old  age  pension  :  — 

(a)  While  he  is  in  receipt  of  poor  relief,  and  until  December, 
1910,  if  he  has  at  any  time  since  January  1,  1908,  received  any  such 
relief. 

Provided,  however,  that  the  following  shall  not  be  considered  as 
poor  relief  :  ■ — 

(I)  Any  medical  or  surgical  assistance  supplied  or  recommended 
by  a  medical  officer. 

(II)  Any  relief  by  reason  of  the  maintenance  of  any  dependent     * 
of  the  person  in  lunatic  asylum,  infirmary  or  hospital,  or  by  reason 

of  the  payment  of  expenses  of  the  burial  of  a  dependent. 

1  See  "  Outlook,"  July  18,  1908,  p.  591. 


1910.]  HOUSE  — No.  1400.  95 

(III)  Any  relief  wiiieh  by  law  is  declared  not  to  disqualify  for 
the  parlianientary  franchise. 

(b)  If  he  has  habitually  failed  to  work,  according  to  his  ability, 
opportunity  and  need,  for  the  maintenance  of  himself  and  those 
dependent  ui)on  him.  Provided,  that  the  person  shall  not  be  dis- 
qualified if  he  has  continuously,  for  ten  years  prior  to  attaining 
the  age  of  60,  made  such  provision  against  old  age,  sickness  and 
so  on  as  may  "be  recognized  to  be  proper  for  the  purpose  of  regula- 
tions under  the  pensions  act. 

(c)  While  he  is  detained  in  any  lunatic  asylum. 

(d)  During  the  continuance  of  any  period  of  disqualification  im- 
posed in  consequence  of  conviction  for  an  offence. 

2.  A  person  who  has  been,  before  the  passing  of  the  act  or  there- 
after, convicted  of  any  offence  and  ordered  to  be  imprisoned  without 
option  of  a  fine,  shall  be  disciualified  while  he  is  in  prison,  and  for 
ten  years  after  his  i-elease. 

3.  A  person  of  60  years  of  age  or  upwards,  who  has  been  con- 
victed under  the  inebriates  act,  is  not  necessarily  disqualified;  but 
the  court  may,  if  he  think  fit,  order  such  person  to  be  disqiialified 
for  a  period  not  exceeding  ten  years. 

The  amount  of  the  pension  is  5s.  ($1.25)  weekly  for  all 
beneficiaries  whose  yearly  incomes  do  not  exceed  £21  ($105). 
The  pension  is  reduced  by  1-shilling  stages  for  those  whose 
incomes  are  above  £21  and  below  £31,  10s.  ($157.50),  and 
ceases  when  the  latter  limit  is  reached.  The  schedule  for 
this  sliding  scale  is  as  follows :  — 


Means  of  Pensioner. 


Rate  of  Pension 
Per  Week. 


Where  the  yearly  means  of  the  pensioner,  as  calculated  under  this 
act:  — 
Do  not  exceed  £21  ($105) 

s. 
5 

d. 
0 

Exceed  £21,  but  do  not  exceed  £23,  2s.,  6d.  ($115.12),  . 

4 

0 

E.xceed  £23, 12s.,  6d.,  but  do  not  exceed  £26,  5s.,  Od.  (S131 .  25), 

3 

0 

Exceed  £26,  Ss.,  Od.,  but  do  not  exceed  £28,  173.,  6d.  ($143.37), 

O 

0 

Exceed  £28, 17s.,  6d.,  but  do  not  exceed  £31, 10s.,  Od.  ($157.50), 

1 

0 

Exceed  £31,  lOs 

No 

pension . 

The  machinery  for  administerinc;  the  act  includes  local 
pension  committees,  a  central  pension  authority  and  pension 
officers.  A  local  pension  committee  is  appointed  for  every 
borough  and  urban  district  having  a  population  of  20,000 


96  OLD   AGE   PENSIONS.  [Jan. 

or  over,  and  for  every  county,  by  the  council  of  borough, 
district  or  county.  The  central  pension  authority  is  the 
local  government  board.  The  pension  officers  are  appointed 
by  the  treasury.  The  regulations  regarding  evidence,  pres- 
entation and  determination  of  claims  and  procedure  of 
committees  are  prescribed  by  the  treasury,  in  conjunction 
with  the  local  government  board  and  the  postmaster-general. 
Claims  for  pensions  are  presented  and  pensions  are  paid 
through  the  post  offices.  The  penalty  for  false  statements  or 
misrepresentation,  in  order  to  qualify  for  a  pension,  is  im- 
prisonment for  a  term  not  exceeding  six  months,  with  hard 
labor.  The  amount  required  for  the  payment  of  pensions 
and  the  administration  of  the  act  is  "  paid  out  of  moneys 
provided  by  Parliament ;  "  that  is  to  say,  the  cost  of  the 
scheme  is  defrayed  by  general  taxation. 

The  administrative  provisions  of  the  act  are  described  in 
Part  I.  of  the  annual  report  of  the  local  government  board  for 
1908-09,  as  follows :  — 

The  procedure  to  be  followed  by  a  elaunant  for  an  old  age  pension 
and  the  method  of  dealing  with  a  claim  may  be  briefly  referred  to. 
A  form  of  claim  may  be  obtained  at  any  post  office,  and  in  it  the 
claimant  is  required  to  state  his  full  name  and  postal  address,  occu- 
pation, sex,  whether  married  or  single,  widower  or  widow,  age,  date 
of  birth,  and  place  where  born,  whether  the  claimant  is  a  British 
subject  and  has  lived  for  the  last  twenty  years  in  the  United  King- 
dom, and  certain  particulars  as  to  his  means.  The  claimant  must 
sign  the  form,  or,  if  he  cannot  write,  make  his  mark,  and  his  sig- 
nature or  mark  must  be  witnessed  by  some  other  person.  A  post- 
master is  required  to  give  any  necessary  information  and  assistance 
to  a  person  desii'ing  to  make  a  claim.  The  claims  may  be  handed 
in  at  the  post  office  at  which  the  claimant  wishes  the  pension  to  be 
paid,  for  transmission  to  the  pension  officer,  or  be  sent  to  the  pen- 
sion officer  by  the  claimant.  The  pension  committee  of  the  district 
may  direct  that  claims  shall  be  sent  to  them  in  the  first  instance,  and 
in  such  a  case  they  transmit  them  to  the  pension  officer. 

On  receiving  the  claim,  the  pension  officer  proceeds  to  investigate 
the  statements  made  therein,  and  by  personal  inquiry  of  the  claimant 
and  in  other  ways  ascertains  whether  or  not  the  claimant  satisfies 
the  statutory  conditions,  and  is  in  all  respects  entitled  to  a  pension. 
The  claim  with  his  report  on  it  is  then  sent  by  him  to  the  pension 
committee.     In  the  report  the  pension  officer  recommends  that  the 


1910.]  HOUSE  — No.  1400.  97 

claim  should  be  allowed,  and,  if  so,  at  what  rate  of  pension,  or  dis- 
allowed, giving  the  reason  in  the  latter  case. 

The  committee  consider  the  claim  not  later  than  seven  days  after 
the  receipt  of  the  pension  oflfieer's  report.  Notice  of  the  meeting 
for  considering  the  claim  must  be  given  to  the  pension  officer,  and 
he  is  entitled  to  attend  tlie  meeting  and  to  speak,  but  not  to  vote 
thereat.  If  the  committee  think  that  further  infoi-mation  is  neces- 
sary, (hey  may  ask  the  pension  officer  to  procure  it. 

The  committee  then  proceed  to  alloAV  or  disallow  the  claim.  Be- 
fore giving  a  decision  adverse  to  the  claimant  the  committee  must 
give  him  an  opportunity  of  being  heard,  unless  a  previous  claim 
has  been  made  and  disallowed  within  the  previous  four  months,  or 
the  claim  on  the  face  of  it  discloses  that  the  statutory  conditions 
are  not  fulfilled. 

The  claimant  on  receiving  notice  may  attend  and  be  heard  at  the 
meeting. 

Notice  of  the  committee's  decision  must  be  sent  forthwith  to  the 
pension  officer  and  the  claimant. 

If  a  pensioner  considers  that  he  is  entitled  to  a  higher  rate  of 
pension  than  has  been  allowed,  he  may  raise  a  question  by  submitting 
a  statement  of  the  case  to  the  pension  officer.  The  pension  officer 
may  raise  a  question  as  to  the  continuance  of  the  fvilfillment  of  the 
statutory  conditions  in  the  case  of  a  pensioner,  or  as  to  the  dis- 
qualification of  the  pensioner,  or  as  to  the  weekly  rate  of  pension 
to  which  tlie  pensioner  is  entitled;  and  he  must  take  into  considera- 
tion any  representation  by  any  person  that  such  a  question  should 
be  investigated.  The  pension  officer  reports  on  any  such  question 
and  submits  it  to  the  committee,  who  are  required  to  consider  and 
determine  the  question  as  if  it  were  a  claim. 

Provisions  are  further  made  for  appeal  to  the  local  govern- 
ment board  against  decisions  of  committees. 

The  number  of  pensioners  who  qualified  under  the  act  and 
the  total  expense  of  the  measure  considerably  exceed  the 
official  estimates  prepared  prior  to  the  enactment  of  the  law. 
According  to  tables  prepared  by  the  registrar-general,  printed 
in  the  last  blue  book  relating  to  old  age  pensions,  1907,^  the 
estimated  population  over  70  years  of  age  in  that  year  was 
1,254,280 ;  the  number  of  persons  over  70  for  the  year  1911 
is  estimated  1,286,264;  the  number  of  persons  who  would 
be  pensionable  under  such  a  measure  as  the  old  age  pension 

1  "Old  Age  Pensions.     Tables  prepared  in  Connection  with  the  Question  of  Old  Age 
Pensions,  with  Preliminary  Memorandum,"  1S07,  p.  31. 


98  OLD   AGE   PENSIONS.  [Jan. 

act  now  in  force  is  estimated  at  395,931  for  the  same  year. 
This  calculation  was  based  on  the  assumption  that  896,333 
persons  over  70  years  of  age  would  be  disqualified  for  the 
receipt  of  a  pension  as  paupers,  aliens,  criminals,  lunatics,  or 
on  the  ground  of  possession  of  an  income  of  more  than  10s.  a 
week,  or  on  account  of  inability  to  comply  with  the  thrift  test. 
The  total  cost  of  the  pension  scheme  for  persons  over  YO  years 
of  age  was  estimated  at  £6,273,292   ($31,366,460). 

The  report  of  His  Majesty's  Inland  Revenue  Commis- 
sioners for  the  year  ending  March  31,  1909,  the  latest  official 
publication  giving  statistics  of  the  pension  act,  shows  that 
in  the  first  three  months  of  the  operation  of  the  law  647,494 
pension  claims  were  allowed.  This  total  included  369,037 
for  England  and  Wales,  183,500  for  Ireland,  70,294  for 
Scotland  and  24,663  for  Wales.  Later  figures  concerning 
the  number  of  pensioners  and  the  amount  of  expenditure  are 
given  in  a  consular  report  by  Consul-General  John  L.  Griffiths 
of  London,  under  date  of  November  26,  1909.  These  figures 
cover  the  first  eight  months  of  the  operation  of  the  act,  ending 
August  31,  1909.  The  total  number  of  pensioners  is  stated 
as  667,000,  including  410,000  for  England  and  Wales, 
184,000  for  Ireland  and  73,000  for  Scotland.  The  total 
expenditure  for  the  eight  months  is  given  as  $26,298,565.  It 
thus  appears  that  the  number  of  pensioners  at  this  date  ex- 
ceeded by  270,000  the  preliminary  official  estimate  for  1911. 
The  expenditure  was  at  the  rate  of  about  $40,000,000  a 
year,  or  approximately  $10,000,000  more  than  the  original 
calculation. 

The  excess  of  the  number  of  pensioners  and  the  cost  of  the 
pensions  over  the  preliminary  estimates  is  undoubtedly  to  be 
explained  by  the  difficulty  of  enforcing  exactly  the  conditions 
of  eligibility  prescribed  in  law.  Manifestly  it  is  not  possible 
to  administer  with  uniform  precision  the  income  qualification 
or  the  thrift  test.  The  mere  determination  of  age  also  gives 
rise  to  grave  difficulties.  When  the  bill  was  passed  it  was 
estimated  that  there  were  173,000  persons  in  Ireland  70 
years  of  age  or  over,  of  whom  a  considerable  proportion  would 
be  disqualified  for  pensions  under  the  act.       There  are  now 


1910.]  HOUSE  — No.  1400.  99 

184,000  pensioners  in  Ireland,  or  11,000  more  persons  than 
the  estimated  total  population  over  70  years  of  age. 

The  civil  service  estimate  of  the  probable  expenditure 
under  the  pension  act  for  the  year  ending  March  31,  1910,  is 

as  follows :  — 

Pensions, £8,700,000     ($43,500,000) 

Expenses  of  administration,  .         .         .  325,400         (1,627,000) 

Total, £9,025,400     ($45,127,000) 

(c)    Denmark. 

A  unique  system  of  old  age  relief  or  pensions  was  estab- 
lished in  Denmark  in  1891.  It  might  be  described  briefly  as 
a  scheme  of  outdoor  relief  for  the  deserving  aged  poor.  The 
object  of  the  enactment  was  to  assist  respectable  old  persons  to 
maintain  themselves  without  seeking  relief  as  paupers,  and 
thus  forfeiting  their  civil  rights. 

The  bill  for  the  establishment  of  old  age  relief  was  intro- 
duced by  the  Conservative  party  in  the  hope  of  preparing 
the  way  for  a  reconciliation  with  the  moderate  and  radical 
Liberals.  The  Social-Democrats  opposed  the  scheme  at  first, 
fearing  that,  if  successful,  it  might  deprive  them  of  partisans. 
In  the  course  of  time,  however,  they  abandoned  their  opposi- 
tion, and  after  the  passage  of  the  law,  April  9,  1891,  they 
gave  it  their  unqualified  support. 

The  pensionable  age  is  60  years,  which  is  the  lowest  limit 
fixed  in  any  public  pension  scheme  now  in  operation. 
Numerous  conditions  of  eligibility  for  the  receipt  of  old  age 
relief  are  prescribed.  The  applicant  must  be  unable  to  pro- 
vide the  necessaries  of  life,  or  proper  treatment  in  case  of 
sickness,  for  himself  and  those  dependent  upon  him.  He 
must  "  not  have  undergone  sentence  for  any  transaction  gen- 
erally accounted  dishonorable,  and  in  respect  to  which  he 
has  not  reached  rehabilitation."  His  poverty  must  not  be 
due  to  his  own  fault.  He  must  for  ten  years  have  had  a 
fixed  residence ;  must  not  have  been  sentenced  for  begging  or 
vagrancy;  must  not  have  received  poor  relief.  Persons  over 
60  years  of  age  at  the  time  the  law  came  into  operation  are, 


100  OLD   AGE   PENSIONS.  [Jan. 

however,  not  disqualified  on  account  of  the  receipt  of  poor 
relief,  provided  that  the  relief  began  after  the  sixtieth  year. 

The  amount  of  old  age  relief  is  not  definitely  fixed.  The 
local  authorities  decide  the  nature  and  the  amount  of  the 
assistance  to  be  given  in  each  individual  case.  The  law 
simply  provides  that  the  relief  "  must  be  sufficient  for  the 
support  of  the  person  relieved  and  for  his  family,  and  for 
their  treatment  in  case  of  sickness ;  "  but  it  may  be  given  in 
money  or  in  kind,  as  circumstances  require,  or  may  consist  of 
free  admission  into  a  suitable  asylum  or  other  establishment 
intended  for  that  purpose.  In  the  city  of  Copenhagen  old 
age  relief  is  usually  given  in  the  form  of  money;  in  the 
country,  where  the  recipients  are  known  to  the  authorities,  it 
is  usually  given  in  the  form  of  food,  fuel  or  rent.  When  the 
relief  is  supplied  in  cash,  the  maximum  amount  is  about 
200  kroner^  ($50)  ;  the  minimum  amount,  about  50  kroner 
($12.50)  annually. 

The  expenses  of  old  age  relief  are  divided  between  the 
communes  and  the  State  in  equal  shares,  the  former  paying 
the  entire  amount  in  the  first  instance,  and  receiving  at  the 
end  of  the  year  reimbursement  of  one-half  from  the  State 
treasury.  The  total  grant  for  old  age  relief  was,  however, 
limited  to  2,000,000  kroner  ($500,000)  in  the  original  act. 
This  amount  was  found  to  be  insufficient  to  reimburse  the 
communes  for  one-half  of  their  expenditures  under  the  act, 
and  in  1899  the  limit  of  the  State  subsidy  was  raised  to 
2,500,000  kroner  ($625,000),  and  in  1902  the  limit  was 
abolished  altogether.  There  is  now  no  restriction  on  the 
annual  amount  of  the  State  appropriation  for  old  age  relief. 

The  number  of  pensioners  under  the  act  in  1908,  the  last 
year   for  which   returns   are    available,   was   71,185.       The) 
population  of  Denmark  in  1906  was  2,605,268.       The  totall 
amount  expended  was  8,805,595  kroner  ($2,201,398).     An 
examination  of  the  statistics  of  the  operation  of  the  system! 
discloses  these  striking  facts :  — 

1.  The  number  of  recipients  of  old  age  relief  has  increasec 
rapidly,  at  the  rate  of  4  to  5  per  cent,  annually,  while  the] 

1  One  krone  equals  $0,268. 


1910.]  HOUSE  — N'j.  1400;  101 

population  has  grow^i  only  at  the  rate  of  Vii  to  1  per  cent. 
The  number  in  1893  was  43,826  ;  in  1908,  71,185. 

2.  The  expenditure  has  risen  in  even  greater  proportion. 
.In    1893   the   total   was   2,963,086   kroner    ($741,000)  ;    in 

1908,  8,805,595  kroner  ($2,201,398). 

3.  At  the  same  time,  the  expenditure  for  ordinary  poor 
relief  has  also  increased  in  recent  years.  When  the  old  age 
relief  system  was  established,  it  was  expected  that  the  cost  of 
poor  relief  would  decrease  to  some  extent,  if  not  proportion- 
ately to  the  gTant  of  old  age  relief.  For  a  few  years  this 
expectation  was  realized.  Since  1896,  however,  the  amount 
expended  for  poor  relief  has  steadily  increased,  and  in  1907 
the  amount  thus  expended  exceeded  the  expenditure  for  1890 

j  by  nearly  1,000,000  kroner  ($250,000).     The  total  expendi- 
j  ture  for  poor  relief  in  1896,  when  it  reached  low  level,  was 
'   7,104,000  kroner   ($1,776,000)  ;  in  1907  it  was  9,177,474 
kroner  ($2,294,368). 

(d)  Belgium. 
The  Belgian  old  age  pension  act,  adopted  May  10,  1900,  is 
a  comprehensive  scheme  of  assisted  insurance  and  non-con- 
tributory pensions.  The  law  has  a  two-fold  object:  first,  to 
encourage  working  people  to  save,  by  assisting  them,  through 
State  contribution,  to  obtain  small  annuities  for  old  age; 
second,  to  help  the  needy  aged  through  special  grants. 

The  privileges  of  the  assisted  insurance  are  confined  to 
persons  insured  at  the  Superannuation  Fund  Bank,  a  savings 
institution  under  State  control,  established  in  1850.  The 
insured  must  be  of  Belgian  nationality,  and  over  16  years  of 
age.  Further,  those  who  pay  in  taxes  and  licenses  certain 
minimum  sums  are  excluded  from  the  benefits  of  the  insur- 
ance scheme.  Those  who  come  under  the  provisions  of  the 
law  are  aided  by  the  State  to  secure  annuities  not  exceeding 
i  360  francs  ($72),  payable  at  the  age  of  65  years.  The 
amounts  contributed  by  the  insured  and  by  the  State  are  cal- 
culated in  each  case  with  the  aim  of  providing  this  particular 
i  amount  of  annuity.  The  State  makes  the  contributions  in 
the  form  of  premiums  added  to  the  sums  paid  by  the  insured. 
The  State  ceases  to  gi'ant  premiums  when  the  sums  credited  to 


102  OL,D   AGJ5   PENSIONS.  [Jan. 

the  insured  person  are  sufficient  to  guarantee  him  an  annuity 
of  360  francs^  ($72). 

The  premiums  paid  by  the  State  are  graded  according  to 
the  age  of  the  insured.  To  illustrate:  insured  persons  who 
were  born  after  January  1,  1860,  are  granted  premiums  of  J 
60  centimes  per  franc  ($0.12)  on  the  first  15  francs  which 
they  pay  each  year ;  they  can  therefore  obtain  total  premiums 
amounting  annually  to  9  francs  ($1.80).  Persons  born  be- 
fore January  1,  1860,  are  divided  into  three  classes,  with, 
an  ascending  scale  of  premiums.  Persons  born  before 
January  1,  1850,  the  third  class,"  receive  a  premium  of  2 
francs  ($0.4-0)  on  each  of  the  first  6  francs  ($1.20),  and  60 
centimes  ($0.12)  on  each  franc  thereafter  up  to  24  francs 
($4.80)  ;  they  can  therefore  obtain  total  premiums  amount- 
ing annually  to  28.80  francs  ($5.76).  This  scheme  of  subsi- 
dizing thrift  by  supplementing  individual  savings  through 
State  contributions  has  proved  very  popular.  The  number 
of  persons  insured  under  the  system  in  1906  was  850,000. 

The  non-contributory  pensions  are  paid  to  persons  over  65 
years  of  age  who  satisfy  the  following  conditions :  — 

1.  The  applicant  must  be  a  Belgian  subject  by  birth,  naturaliza- 
tion or  marriage. 

2.  He  must  have  been  during  at  least  one  year  prior  to  the  appli- 
cation a  resident  of  Belgium. 

3.  He  must  be,  or  must  formerly  have  been,  a  workman,  or  the 
wife  or  widow  of  a  workman. 

4.  He  must  be  in  want,  —  which  means,  luider  the  interpretation  in 
the  act,  unable  to  maintain  himself  in  the  average  condition  of  the 
working-man  of  the  district  engaged  in  the  same  trade.  In  no  ease 
is  the  application  of  a  petitioner  entertained  if,  being  single,  he 
has  a  revenue  of  360  francs  ($72)  per  annum;  or,  being  married, 
a  family  income  of  600  francs  ($120)  per  annum. 

The  amount  of  the  pension  is  small,  namely,  65  francs 
($13). 

The  law  is  administered  by  local  committees  acting  under 
regulations  prescribed  by  the  Minister  of  Industry  and  La- 
bor. Appeal  may  be  taken  from  a  committee's  decision  to 
the  Governor  of  the  Province. 

1  One  franc  equals  $0.1893;  100  centimes  equal  1  franc. 


1910.]  HOUSE  — No.  1400.  103 

The  uumber  of  pensions  paid  under  the  non-contributory 
branch  of  the  Belgian  system  in  1906,  the  last  year  for  which 
figures  could  be  obtained,  was  210,000.  The  total  number 
of  persons  receiving  assisted  insurance  or  pensions  was 
1,060,000,  out  of  a  population  of  7,238,622.  The  annual 
expenditure  amounted  to   15,000,000   francs    ($3,000,000). 

(e)    France. 

France  has  long  had  a  system  of  voluntary,  contributory 
old  age  insurance,  like  the  Belgian  plan,  administered  through 
a  Xational  Insurance  Bank,  with  a  State  guaranty.  The 
bank  was  established  in  1850,  and  the  system  has  been  ex- 
tended and  perfected  by  later  legislation.  It  need  not  be 
described  further,  as  it  is  essentially  identical  with  the 
Belgian  plan,  already  outlined. 

A  system  of  State  aid  for  incapacitated  and  superannuated 
workers  was  instituted  by  an  act  of  July  14,  1905,  which 
went  into  effect  January  1,  1907.  This  new  scheme  is  not 
strictly  a  pension  or  insurance  system,  but  rather  a  scheme 
of  outdoor  relief  for  certain  classes  of  the  aged  poor.  The 
assistance  is  given  to  Frenchmen  over  70  years  of  age  who 
are  incapacitated  for  labor,  and  to  Frenchmen  under  70  years 
of  age  who  are  suffering  from  an  incurable  infirmity  or  dis- 
ease. The  amount  of  the  assistance  is  not  less  than  60  francs 
($12)  a  year,  and  not  more  than  240  francs  ($48)  a  year. 
The  assistance  may  be  given  in  money,  in  the  form  of  hospital 
treatment,  or  other  suitable  provision.  The  expense  is  di- 
vided between  the  commune,  the  department  and  the  State, 
according  to  the  domicile  of  the  beneficiary.  The  condi- 
tion of  acquiring  a  domicile  for  purposes  of  the  act  is  five 
years'  residence  in  a  commune  or  in  a  department.  Persons 
without  communal  or  departmental  domicile  receive  their 
pensions  from  the  State.  In  the  case  of  persons  with  com- 
munal domicile,  a  part  of  the  expense  is  borne  by  the  com- 
mune and  the  remainder  by  the  department  and  the  State. 
In  the  ease  of  those  with  departmental  domicile,  the  expense 
is  divided  between  the  department  and  the  State.  In  the 
case  of  those  without  either  kind  of  domicile,  the  pension 
is  paid  by  the  State.     The  assistance  is  administered  through 


104  OLD   AGE   PENSIONS.  [Jan. 

local  poor  relief  offices.  In  the  commune  the  ordinary  lo- 
cal revenues  are  drawn  upon  for  the  pension  expenditure, 
but  if  these  are  insufficient  special  rates  are  levied.  The 
commune  also  receives  a  pension  subsidy  from  the  depart- 
ment and  another  from  the  State.  The  scheme  of  estimat- 
ing subsidies  is  designed  to  assist  the  poorer  communes  and 
departments  through  contributions  from  the  richer  communes 
and  departments.  The  system  has  been  in  operation  so  short 
a  time  that  detailed  statistics  of  the  scope  and  cost  of  the 
old  age  relief  are  not  obtainable.  The  total  expenditure  in 
1907,  the  first  year  of  operation,  was  about  60,000,000  francs 
($12,000,000). 

Since  1891  the  French  Chamber  of  Deputies  has  had 
under  consideration  a  proposal  for  the  establishment  of  a 
general  old  age  pension  system.  The  measure  has  been  con- 
sidered by  several  committees  which  have  reported  numer- 
ous amendments.  February  24,  1906,  the  bill  was  finally 
passed  by  the  Chamber  of  Deputies  by  an  overwhelming 
vote.  The  essential  principles  of  the  scheme  were  two:  the 
participation  was  obligatory  on  all  workers ;  and  the  ex- 
penses were  provided  for  by  joint  contributions  from  em- 
ployer, employee  and  State.  The  pensionable  age  was  fixed 
at  60  years.  The  bill  as  adopted  by  the  Chamber  was  trans- 
mitted to  the  Senate,  and  by  that  body  was  submitted  to  a 
special  commission  for  thorough  examination.  This  com- 
mission reported  an  amended  measure  in  1909.  The  es- 
sential principles  of  the  bill  as  passed  by  the  Chamber  of  Dep- 
uties are  retained  in  the  revised  draft;  that  is,  the  scheme 
is  compulsory  and  contributory.  The  pensionable  age  was 
advanced  to  65  years.  At  this  writing  the  bill  had  not  yet 
been  passed  by  the  Senate.^ 

The  Senate  bill  provides  for  the  payment  to  all  workers 
who  reach  the  age  of  65  years  of  an  annual  allowance  made  up 
of  two  parts:  (1)  an  annuity  provided  by  the  contributions 
of  the  beneficiary  himself,  and  supplemented  by  an  additional 
subvention  of  one-third  of  the  amount  of  the  annuity  by  the 
State;  (2)  a  pension  of  120  francs  ($24)  per  year,  provided 
through  contributions  by  the  employer  and  the  State.     The 

>  December  28,  1909. 


1910.]  HOUSE  — No.  1400.  105 

amount  of  the  employee's  contribution  is  6  francs  ($1.20) 
yearly;  that  of  the  employer,  9  francs  ($1.80)  yearly.  The 
State  contributes  an  amount  sufficient  to  pay  the  additional 
subvention  of  one-third  of  the  amount  of  the  annuity  and 
provides  the  fixed  pension  of  120  francs,  so  far  as  the  em- 
ployers' contributions  are  not  sufficient  for  this  purpose. 

It  is  interesting  to  observe  that,  while  the  proposed  scheme 
is  based  on  the  compulsory  principle,  the  expression  of 
opinion  by  employers,  employees  and  others,  in  reply  to  an 
inquiry  instituted  by  the  Senate  commission,  was  opposed  to 
that  principle.  Of  the  employers  who  replied  to  the  inquiry 
of  the  commission,  74  per  cent,  voted  against  obligatory  con- 
tributions by  the  employers,  and  69  per  cent,  against  obliga- 
tory contributions  by  the  employees.  Of  the  employees  who 
replied,  54  per  cent,  voted  against  obligatory  contributions  by 
wage  earners,  but  only  23  per  cent,  against  obligatory  con- 
tributions by  employers.  The  total  vote  of  employers,  em- 
ployees and  other  persons  interrogated  was  about  60  per  cent, 
against  obligatory  contributions  by  employers  or  employees. 
The  adoption  of  the  compulsory  principle,  in  spite  of  this  un- 
favorable expression  of  opinion,  seems  to  have  been  brought 
about  by  a  conviction  on  the  part  of  the  members  of  the  com- 
mission that  any  voluntary  pension  scheme  must  fail  to  reach 
the  mass  of  the  wage-earning  population,  and  thus  fall  short  of 
an  effective  solution  of  this  problem. 

(f)  Italy. 
Italy  has  a  system  of  voluntary,  contributory  insurance, 
subsidized  by  the  State,  which  was  established  by  an  act  of 
July  17,  1898,  and  amended  by  later  legislation  in  1901, 
1904  and  1906.  In  the  beginning  the  government  made  an 
appropriation  of  10,000,000  lire^  ($2,000,000)  and  set  aside 
certain  revenues  for  the  insurance  fund.  The  scheme  pro- 
vides for  the  payment  of  annuities  after  the  age  of  60  in  the 
case  of  men,  and  55  in  the  case  of  women.  A  contributory 
period  of  twenty-five  years  is  required.  The  payment  of 
annuities  after  five  years  of  contribution  to  the  fund  is 
allowed  in  the  event  of  permanent  invalidity.     The  amount 

'  One  lira  equals  $0,193. 


106  OLD   AGE   PENSIONS.  [Jan. 

of  annuities  ranges  from  a  minimum  of  120  lire  ($24)  to  360 
lire  ($72).  The  details  of  the  plan  are  substantially  the 
same  as  those  of  the  Belgian  system  of  assisted  insurance 
previously  described.  The  number  of  persons  insured  in 
1907  was  330,000,  out  of  a  total  population  of  32,475,253. 

(g)    New  Zealand. 

The  old  age  pension  act  of  New  Zealand,  passed  November 
1,  1898,  and  amended  in  1900,  1901,  1902,  and  1905,  pro- 
vides a  system  of  non-contributory  pensions.  The  age  limit 
is  65  years.  The  maximum  pension  was  originally  £18 
($90)  a  year,  but  this  was  increased  by  the  amending  act  of 
1905  to  £26  ($130)  a  year,  or  10s.  ($2.50)  a  week.  The 
following  classes  are  disqualified  from  receiving  pensions: 
Maoris  who  receive  grants  under  the  civil  laws  act,  aliens, 
natural  subjects  who  have  not  been  naturalized  one  year,  and 
Chinese  or  other  Asiatics,  whether  naturalized  or  not. 

Applicants  must  satisfy  also  these  further  requirements :  — 

1.  Tlie  applicant  must  have  resided  in  the  colony  for  at  least 
twenty-five  j'ears,  with  limited  privileges  of  absence. 

2.  He  must  not  during  the  twelve  years  prior  to  his  application 
have  been  imprisoned  for  four  months,  or  on  four  occasions,  for 
an  offence  punishable  by  a  year's  imprisonment. 

3.  He  must  not  during  the  past  twenty-five  years  have  been  in 
prison  for  five  years  for  any  offence. 

4.  He  must  not  during  the  past  twelve  years  have  deserted  his 
wife  and  children. 

5.  He  must  be  of  "  good  moral  character,"  and  for  five  years  pre- 
ceding his  application  must  have  led  "  a  sober  and  reputable  life." 

6.  He  must  not  have  deprived  himself  of  property,  directly  or 
indirectly,  in  order  to  qualify  for  a  pension. 

7.  His  yearly  income  must  not  exceed  £60  ($300),  including  pen- 
sion. 

8.  The  net  value  of  his  accumulated  property  must  not  exceed 
£260   ($1,300). 

The  conditions  of  granting  pensions  under  the  New  Zealand 
act  are,  it  will  be  observed,  more  liberal  than  those  laid  down 
in  the  recent  British  act  in  several  respects :  the  age  limit  is 
five  years  lower ;  the  amount  of  the  pension  is  twice  as  large ; 
and  no  pauper  disqualification  is  prescribed. 


1910.]  HOUSE  — No.  1400.  107 

The  administration  of  the  act  is  under  the  direction  of  the 
registrar  at  Wellington,  responsible  to  the  Colonial  Treasury. 
The  colony  is  divided  into  seventy-four  districts,  each  under 
a  deputy  registrar,  who  in  the  cities  is  the  paid  officer  of  the 
old  age  pension  department.  All  claims  are  investigated  by 
stipendiary  magistrates,  who  have  power  to  grant  or  refuse 
pensions.  Each  pension  is  gi'anted  for  twelve  months,  and  a 
new  application  must  be  made  yearly  for  renewal.  The  pen- 
sion is  payable  monthly  at  the  local  post  offices,  on  personal 
application  of  the  pensioner.  Pensions  granted  to  persons  in 
charitable  institutions  are  paid  to  the  governing  bodies  of 
such  institutions. 

The  number  of  pensioners  at  the  close  of  the  fiscal  year, 
March  31,  1909,  was  14,396,  out  of  a  total  population  of  about 
1,000,000.  The  payments  on  account  of  pensions  during 
that  year  amounted  to  £336,760  ($1,683,800).  The  ex- 
penses of  administration  for  the  year  were  £9,098  ($45,490). 
A  survey  of  the  figures  relating  to  the  operation  of  the  act 
since  its  passage  shows  that  the  number  of  pensioners  has 
increased  steadily,  but  not  with  notable  rapidity ;  and  that  the 
amount  paid  in  pensions  has  increased  greatly,  being  in  1909 
more  than  twice  as  large  as  in  1899.  The  latter  fact  is  due 
in  large  measure  to  the  increase  of  the  amount  of  the  pension 
from  £18  to  £26  a  year  in  1905. 

The  effect  of  the  pension  act  on  expenditure  for  poor  relief 
has  been  to  reduce  somewhat  the  amount  spent  on  outdoor 
relief.  The  expenditure  for  indoor  relief,  however,  has  in- 
creased notably  since  the  act  went  into  operation.  Thus  the 
total  expenditure  for  poor  relief  has  risen  considerably.  The 
following  table  shows  the  cost  of  outdoor  and  indoor  relief 
since  the  pension  act  was  passed :  — 


108 


OLD   AGE   PENSIONS. 


[Jan.    \ 


Outdoor  Relief. 


Year  ending  March  31. 

Total 

Cost. 

Cost  per 
Head. 

1898, 

£50,821 

($254,105) 

s.     d. 
1     4i 

1899, 

50.850 

(254,250) 

1     4J 

1900. 

41,796 

(208,980) 

1     U 

1901, 

42,181 

(210.905) 

1     1 

1902, 

38,934 

(194,670) 

0   11^ 

1903, 

43,421 

(217,1^5) 

1     Of 

1904, 

42,618 

(213,090) 

1     Oi 

1905, 

40,799 

(203,995) 

0  Hi 

1906, 

39,547 

(197,735) 

0  lOi 

1907, 

36,532 

(182,660) 

0     9^ 

Indoor  Relief. 


1898 

£35,251 

($176,255) 

s      d. 
0  IH 

1899, 

42,220 

(211,100) 

1     1* 

1900, 

35,812 

(179,060) 

0   Hi 

1901, 

37,692 

(188,460) 

0  llf 

1902, 

49,914 

(249,570) 

1     3 

1903, 

49,737 

(248,685) 

1     2i 

1904, 

46,613 

(233,065) 

1      li 

1905. 

52,539 

(262,695) 

1     2fr 

1906, 

63,726 

(318.630) 

1     5 

1907, 

- 

- 

-     - 

(h)    New  South  Wales. 

An  old  age  pension  system  was  established  in  this  colony 
by  the  act  of  December  11,  1900,  modelled  after  that  of  New 
Zealand.  The  act  repeated  the  preamble  of  the  New  Zealand 
statute :  "  Whereas,  it  is  equitable  that  deserving  persons  who 
during  the  term  of  life  have  helped  to  bear  the  public  burden 
of  the  Commonwealth  by  the  payment  of  taxes,  and  by  open- 
ing up  its  resources  by  their  labor  and  skill,  should  receive 
from  the  colony  pensions  in  their  old  age,^"  etc.  Besides  old 
age  pensions,  New  South  Wales  also  established  invalidity 
and  accident  pensions  in  1907. 


1910.]  HOUSE  — No.  1400.  109 

The  provisions  of  the  system  were  substantially  the  same 
as  those  of  the  New  Zealand  act.  The  pensionable  age  was 
65.  The  amount  of  the  pension  was  £26  ($130.)  New 
South  Wales  adopted  this  higher  rate  at  the  outset,  not  start- 
ing with  the  lower  rate  of  £18  ($90),  as  did  New  Zealand 
and  Victoria.  The  qualifications  for  the  receipt  of  a  pension 
were  also  practically  identical  with  the  New  Zealand  require- 
ments. 

The  plan  of  administration,  however,  diifered  somewhat 
from  the  New  Zealand  method.  The  colony  was  divided  into 
districts.  The  central  authority  was  a  board  of  three  per- 
sons, subject  to  the  control  of  the  colonial  treasurer.  The 
district  administration  was  in  the  hands  of  boards  of  three 
persons  appointed  by  the  governor.  There  was  a  central 
registrar,  and  there  were  deputy  registrars  for  each  district. 
This  board  system  was  criticised  as  expensive  and  ineffective. 
The  central  board  in  its  report  for  the  year  1901-02  pointed 
out  that  the  system  tended  to  increase  the  number  of  pen- 
sioners and  the  expense  of  administration,  as  compared  with 
the  conditions  in  New  Zealand  and  Victoria.  The  number 
of  old  age  pensioners  in  June,  1909,  was  22,110,  out  of  a  to- 
tal population  of  over  1,580,000.  The  amount  disbursed  in 
pensions  was  £526,835  ($2,634,175).  The  cost  of  adminis- 
tration was  £25,141  ($125,705).  Regarding  the  effect  of  the 
pension  system  on  poor  relief  and  institutional  expenditures, 
Mr.  J.  L.  Williams,  Under  Secretary  of  Justice,  stated :  — 

The  class  of  persons  in  our  benevolent  asylums  —  there  are  no 
workhouses  on  the  English  system  in  this  State  —  are,  as  a  rule, 
too  helpless  to  look  after  themselves,  and  are,  therefore,  not  capable 
of  living  on  a  pension.  There  is,  however,  a  constant  flow  of  old 
age  pensioners  into  and  out  of  these  institutions,  as  well  as  hos- 
pitals. The  old  age  pension  system  has  not  shown  any  indication 
of  supplanting  the  asylums. 

The  old  age  pension  system  of  New  South  Wales  was  super- 
seded July  1,  1909,  by  the  general  act  for  the  Commonwealth 
of  Australia,  which  went  into  effect  on  that  date.^ 

»  Seep.  112. 


no  OLD   AGE   PENSIONS.  [Jan. 

(i)    Victoria. 

Victoria  followed  the  example  of  New  Zealand  and  New 
South  Wales  in  establishing  an  old  age  pension  system  in 
1901.  Two  tentative  acts  were  passed  January  18,  1901, 
and  these  were  superseded  by  the  general  statute  of  December 
11,  1901.  This  act  was  amended  by  the  law  of  October  8, 
1907,  which  increased  the  amount  of  the  pension  from  8s. 
($2)  per  week  to  10s.  ($2.50)  per  week.  The  preamble  of 
the  Victorian  act  was  even  more  explicit  and  emphatic  than 
that  of  the  New  Zealand  and  New  South  Wales  statutes  in 
declaration  concerning  the  obligation  of  the  State  to  support 
the  aged  poor.  It  read :  "  Whereas,  it  is  the  duty  of  the 
State  to  make  provision  for  its  aged  and  helpless  poor,"  etc. 

The  pensionable  age  in  Victoria  and  the  amount  of  the 
pension  were  the  same  as  in  the  other  colonies,  namely,  65 
years  and  £26  ($130)  respectively.  The  qualifications  laid 
down  for  the  receipt  of  a  pension  were,  however,  somewhat 
different  and  more  detailed.  Aliens,  Chinese  and  other  Asi- 
atics, aboriginal  natives  of  Australia  or  New  Zealand  and 
British  subjects  who  had  not  been  naturalized  for  six  months 
were  disqualified.     The  statutory  requirements  were :  — 

1.  The  candidate  must  have  been  a  resident  of  Victoria  for  twenty 
years. 

2.  He  must  not  have  been  absent  from  the  colony  more  than  five 
years  during  the  time  in  which  the  twenty  years  commenced  to  run, 
and  must  have  resided  in  Victoria  continuously  for  not  less  than 
five  years  immediately  preceding  the  date  of  this  application. 

3.  He  must  not  have  been  convicted  of  drunkenness  three  times, 
imprisoned  for  six  months  during  the  five  years  preceding  his  appli- 
cation, or  for  three  years  during  the  twenty  years  preceding. 

4.  He  must  not  have  deserted  his  wife  or  neglected  to  support 
his  family. 

5.  He  must  not  be  in  receipt  of  a  weekly  income  of  8s.  or  upwards, 
or  own  property  of  £160  ($800)  or  upwards. 

6.  He  must  not  have  deprived  himself  of  property  or  income  in 
order  to  qualify. 

7.  He  must  have  made  reasonable  efforts  at  self-support. 

8.  He  must  not  have  relatives  that  are  able  to  provide  for  him, 
and  must  be  unable  to  maintain  himself. 


1910.]  HOUSE  — No.  1400.  Ill 

The  administration  was  under  the  direction  of  a  registrar 
of  old  age  pensions,  appointed  bj  the  governor,  and  subject 
to  the  control  of  the  treasurer.  This  centralized  system  of 
administration  worked  more  satisfactorily  than  the  de- 
centralized method  in  New  South  Wales.  The  Royal  Aus- 
tralian Commission  on  Old  Age  Pensions  of  1905  contrasted 
the  administration  in  Victoria  and  that  in  New  South  Wales 
thus :  — 

The  New  South  Wales  act  has  been  described  as  cumbersome  and 
defective.  The  cost  of  administration,  as  contrasted  with  the  ex- 
pense in  Victoria  and  in  New  Zealand,  is  noteworthy.  The  extra 
cost  is  said  to  be  due  to  the  sj'stem  of  administration  by  boai'ds, 
and  the  large  amount  paid  to  a  bank  for  disbursing  pensions.  .  .  . 
In  Victoria  the  cost  of  administration  is  low,  and  the  act  has  been 
carefully  administered,  owing  to  the  stringent  character  of  the  in- 
vestigations made,  particularly  as  to  the  ability  of  children  to  sup- 
port parents  who  are  claimants  for  pensions.  The  number  of 
pensioners  is  decreasing. 

The  number  of  pensioners  in  Victoria  was  12,368  in  1909, 
out  of  a  population  over  65  years  of  age  of  66,452  ;  while  New 
South  Wales  had  22,110  pensioners  out  of  an  aged  popula- 
tion of  47,426. 

The  total   population   of  Victoria  was   about   1,230,000. 

'    The  amount  paid  in  pensions  was  £264,971   ($1,324,855). 
The  cost  of  administration  was  £1,905  ($9,525).    As  in  New 

;    South  Wales,  the  pension  system  appears  not  to  have  reduced 

:    the  outlay  for  aged  poor.     Mr.  H.  W.  Meakin,  treasurer  of 

I    the  colony,  states :  — 

The  introduction  of  the  old  age  pension  system  in  this  State  has 
;  had  no  appreciable  effect  on  the  charitable  institutions.  The  only 
institutions  that  would  be  likely  to  be  affected  are  benevolent  asy- 
lums. For  the  year  prior  to  the  introduction  of  the  old  age  pension 
system  the  total  cost  of  these  institutions  was  £38,837  ($194,185), 
and  the  average  cost  was  .£12,  14s.,  2d.  ($61)  per  bed  for  daily 
average  of  inmates;  and  for  the  last  year  the  figures  were  £39,711 
($198,555)  and  £14,  Os.,  5d.  ($70),  respectively.  The  increased  cost, 
however,  is  explained  by  the  fact  that  the  inmates  are  more  liberally 
treated  now  than  they  were  previously. 


112  OLD   AGE   PENSIONS.  [Jan.   1 

The  Australian  Royal  Commission  of  1905  drew  the  follow-    j 
ing  conclusions  regarding  the  relation  of  a  pension  system  to 
poor  relief  in  the  colonies :  — 

The  amounts  voted  for  charities  by  the  governments  of  New  South 
Wales  and  Victoria,  where  old  age  pension  acts  are -in  existence, 
have  not  been  appi'eciably  reduced  in  consequence  of  the  passing 
of  those  acts.  It  is  stated  by  witnesses  that  the  old  age  pensions 
acts  have  provided  almost  entirely  for  a  different  class  of  persons. 
It  is,  however,  not  to  be  expected  that  so  soon  after  the  establish- 
ment of  old  age  pensions  in  the  States  mentioned  any  marked 
change  would  be  apparent.  In  nearly  all  the  States  the  majority 
of  old  people  obtaining  relief  are  accommodated  under  the  barrack 
system;  and  after  spending  years  in  public  institutions,  a  large  per-  \ 
eentage  become  so  dependent  on  others  that  they  are  unable  to  care 
for  themselves.  It  has  been  shown  that  in  numerous  cases  the  grant- 
ing of  pensions,  with  the  consequent  removal  of  inmates  from 
asylums,  has  been  exceedingly  harmful,  and  that  many  of  them  have 
drifted  into  most  undesirable  quarters,  and  suffered  neglect  and 
privation. 

The  Victorian  old  age  pension  scheme  also  went  out  of  ex- 
istence July  1,  1909,  when  the  Australian  act  took  effect. 

(j)    Australia. 

The  Commonwealth  of  Australia  finally  provided  for  a  sys- 
tem of  old  age  pensions  by  an  act  passed  June  10,  1908,  to 
take  effect  July  1,  1909.  The  establishment  of  a  general 
system  of  old  age  pensions  for  the  Commonwealth  was 
thought  to  be  necessary  in  the  interest  of  deserving  residents, 
who  were  unable  to  qualify  for  pensions  under  the  laws  of  the 
colonies  having  pension  systems.  The  Royal  Commission 
of  1905  declared  in  its  report:, — 

It  is  desirable  that  a  Commonwealth  system  of  old  age  pensions 
should  be  established  at  an  early  date.  In  those  States  in  which 
old  age  pension  acts  are  in  force,  a  very  deserving  class  of  persons 
have  availed  themselves  of  pensions  offered.  .  .  .  There  is  a  con- 
sensus of  opinion  that  old  age  pensions  should  be  under  the  control 
of  the  Commonwealth,  and  your  commissioners  have  been  made 
aware  of  the  fact  that  many  necessitous  and  otherwise  qualified 
persons  are  unable  to  obtain  pensions  in  New  South  Wales  or  Vie- 


1910.]  HOUSE  — No.  1400.  113 

toi-ia,  from  not  having  lived  a  sufficient  number  of  years  in  either 
State.  ]\Iany  of  these  aged  people  have  resided  in  Australia  for 
a  much  longer  period  than  the  qualified  time  fixed  by  the  acts  of 
those  States. 

The  commission,  accordingly,  reconmiended  a  system  of 
old  age  pensions  for  the  Commonwealth,  "  to  be  granted  as  a 
right,  and  not  as  a  charity." 

The  Australian  old  age  pension  act,  based  on  the  recom- 
mendations of  the  Koyal  Commission,  provides  for  the  grant 
of  pensions  not  to  exceed  £26  ($130),  at  the  age  of  65,  to  per- 
sons whose  incomes  from  all  sources  do  not  exceed  £52  ($260  ) 
per  annnm.  It  is  further  provide'Vl  that  the  age  at  which 
women  may  receive  an  old  age  pension  may  be  lowen  d,  by 
proclamation  of  the  governor-general,  to  60  years.  The  fol- 
lowing persons  are  expressly  disqualified  for  the  receipt  of 
pensions:  aliens,  persons  who  have  not  been  naturalized  for 
a  period  of  three  years  next  preceding  the  date  of  pension 
claim,  Asiatics  or  aboriginal  natives  of  Australia,  Africa, 
Xew  Zealand  or  the  islands  of  the  Pacific. 

The  statutory  requirements  for  the  receipt  of  a  pension,  in 
the  case  of  persons  not  disqualified  on  one  of  these  grounds, 
are  thus  defined :  — 

1.  The  applicant  must  be  a  resident  of  Australia  on  the  date  when 
lie  makes  his  claim  to  a  pension. 

2.  Must    have    so    resided    continuously    for    at    least    twenty-five 


years.' 


3.  Must  be  of  good  character. 

4.  If  a  husband,  must  not  for  twelve  months  or  upwards  during 
five  years  immediately  preceding  that  date,  without  just  cause,  have 
deserted  his  wife,  or  without  ji;st  cause  failed  to  provide  her  with 
adequate  means  of  maintenance,  or  neglected  to  maintain  any  of 
his  children  being  under  the  age  of  14  years;  or,  if  a  wife,  must 
not  for  twelve  months  during  five  years  immediately  preceding  such 
date,  without  just  cause,  have  deserted  her  husband,  or  deserted  any 
of  her  children  being  undei-  14  years  of  age. 

5.  The  net  capital  of  his  accumulated  property,  whether  in  or 
out  of  Australia,  must  not  exceed  £310. 

C^.  IMust  not  directly  or  indirectly  have  deprived  himself  of  prop- 
erty or  income  in  order  to  qualify  for  or  obtain  a  pension. 

>  This  was  changed  to  twenty  years  by  an  amending  act  of  August  13,  1909. 


114  OLD   AGE   PENSIONS.  [Jan. 

7.  Must  not  at  any  time  within  six  months  have  been  refused  a 
pension. certificate,  except  for  the  reason  that  he  was  disqualified  on 
account  of  his  age,  or  for  reasons  which  are  not  in  existence  at  the 
time  of  the  future  application. 

It  is  provided  that  an  occasional  absence  from  Australia, 
not  being  in  the  aggregate  one-tenth  of  the  total  period  of 
residence,  shall  not  be  taken  into  account  for  purposes  of  the 
act. 

The  amount  of  pension  shall  be  "  at  such  rate  as,  having 
regard  to  all  the  circumstances  of  the  case,  the  commissioner 
or  deputy  commissioner  who  determines  the  pension  claim 
deems  reasonable  and  Sufficient."  The  maximum  amount,  I 
however,  is  limited  to  £26  ($130)  per  annum;  and  it  is  fur- 
ther provided  that  no  pension  shall  be  paid  of  such  amount 
as  to  render  the  pensioner's  total  income,  inclusive  of  pen- 
sion, more  than  £52  ($260)  per  annum.  In  case  the  pen- 
sioner has  accumulated  j^roperty,  the  amount  of  pension  is 
subject  to  these  deductions:  first,  £1  for  every  £10  by  which 
the  value  of  the  property  exceeds  £50,  except  where  the  prop- 
erty includes  a  home,  in  which  the  pensioner  himself  resides, 
and  from  which  he  draws  no  income ;  second,  £1  for  every 
£10  by  which  the  value  of  the  property  exceeds  £100,  in  case 
the  property  includes  a  home,  in  which  the  pensioner  resides 
and  from  which  he  draws  no  income.  It  is  further  provided 
that  where  both  husband  and  wife  are  pensioners,  the  deduc- 
tions shall  be  for  excess  oA^er  £25  and  £50  respectively,  under 
the  circumstances  described  above. 

In  a  special  section  of  the  act  provision  is  made  for  invalid 
pensions.  This  part,  however,  does  not  become  effective  un- 
til so  ordered  by  proclamation.  The  disqualifications  and 
the  requirements  for  the  receipt  of  an  invalid  pension  are 
similar  to  those  laid  down  for  old  age  pensions. 

The  administration  of  the  act  is  entrusted  to  a  commis- 
sioner of  pensions  for  the  Commonwealth,  assisted  by  a  dep- 
uty commissioner  for  each  State,  and  registrars  for  each  of 
the  pension  districts  into  which  the  Commonwealth  is  to  be 
divided  by  the  commissioner,  under  the  provisions  of  the 
act. 


1910.]  HOUSE  — No.  1400.  115 

Elaborate  provisions  are  made  for  the  presentation  of 
pension  claims  and  their  investigation  by  the  officials.  In 
general,  any  person  desiring  a  pension  shall  submit  a  pen- 
sion claim  to  the  registrar  of  the  district  in  which  he  resides. 
The  latter  then  makes  an  investigation,  and  refers  the  claim, 
with  a  full  report  of  the  result  of  the  investigation,  to  a  mag- 
istrate. The  magistrate  is  empowered  either  to  recommend 
the  acceptance  of  the  claim,  or  to  postpone  action  for  further 
evidence,  or  to  recommend  its  rejection.  The  recommenda- 
tion of  the  magistrate  is  endorsed  upon  the  claim,  which  is 
then  returned  to  the  registrar,  who  transmits  it  to  the  deputy 
commissioner.  The  latter,  or  in  some  cases  as  provided  in 
the  act  the  commissioner,  finally  pronounces  upon  the  claim, 
and,  if  the  decision  is  favorable,  determines  the  rate  of  pen- 
sion and  the  date  of  commencement,  and  issues  a  pension  cer- 
tificate in  a  prescribed  form. 

Pensions  may  be  withdrawn  at  the  discretion  of  the  regis- 
trar from  persons  who  misspend  their  income,  or  otherwise 
show  themselves  unfit  for  the  further  enjoyment  of  a  pension. 
In  case  a  pensioner  becomes  an  inmate  of  an -insane  asylum 
or  a  benevolent  home,  the  pension  is  suspended  during  the 
time  he  remains  in  the  institution.  If  a  pensioner  leaves 
Australia  permanently,  the  pension  is  forfeited. 

The  Australian  pension  act  supersedes  the  pension  sys- 
tems of  the  States  of  New  South  Wales,  Victoria  and  Queens- 
land.^ The  latter  became  inoperative  when  the  new  law 
went  into  effect.  The  act  applies  to  the  entire  Common- 
wealth, including;  the  States  of  New  South  Wales,  Victoria, 
South  Australia.  West  Australia.  Queensland  and  Tasmania. 

The  number  of  pensioners  in  December,  1909,  was  GO, 432, 
out  of  a  total  population  of  3,832,760.  The  preliminary  es- 
timate of  the  number  of  pensioners,  prepared  by  the  statis- 
tician of  the  Commonwealth  in  March,  1909,  was  .58,100. 
The  number  of  pensioners  already  exceeds  this  estimate  by 
over  2,000,  and  it  is  expected  that  the  number  will  increase 
before  the  end  of  the  first  year  of  operation  to  70,000.     The 


>  The  pension  system  of  Queensland,  which  is  not  described  in  this  report,  had  a  life 
of  only  twelve  months,  having  gone  into  effect  July  1,  1908. 


116 


OLD   AGE    PENSIONS. 


[Jan. 


figures  as  to  the  working  of  the  act  at  the  present  time  are 
as  follows :  —  • 


Name  of  State. 

Common- 
wealth Pen- 
sions granted. 

State 

Pensions 

transferred. 

Pension  Claims 

now  under 
Consideration. 

New  South  Wales, 
Victoria,         ..... 
Queensland,  ..... 
South  Australia,     .... 
West  Australia,      .... 
Tasmania,      ..... 

3,003 
7,225 
1,291 
4,225 
1,716 
2,771 

21,619 

11,944 

6,638 

763 
173 
159 
1,437 
390 
259 

Totals 

20,231 

40,201 

3.181 

(k)    Canada. 

The  Canadian  Parliament  passed,  Jnly  20,  1908,  an  act 
authorizing  the  issue  of  government  annuities  for  old  age. 
This  system  of  assisting  working  people  to  provide  for  old 
age  is  purely  voluntary  and  contributory,  differing  widely 
from  the  Australasian  old  age  pension  systems.     The  act  de- 
clares in  the  preamble :  "  Whereas,  it  is  in  the  public  interest 
that  habits  of  thrift  be  promoted,   and  that  the  people  of 
Canada  be  encouraged  and  aided  thereby,  so  that  provisions 
may  be  made  for  old  age ;  and  Whereas,  it  is  expedient  that 
further  facilities  be  offered  for  the  attainment  of  the  said 
objects,"  etc.      The  law  provides  that  the  minister  of  trade 
and  commerce  may  make  contracts  with  any  person  domi- 
ciled in  Canada  for  the  sale  of  an  immediate  or  a  deferred 
annuity,  depending  on  a  single  life,  or  partly  depending  on 
a  single  life  and  partly  for  a  term  of  years,  or  depending  on 
the  joint  continuance  of  two  lives.     The  minimum  amount 
of  annuity  is  $50  a  year,  the  maximum  $600.     No  annuity 
is  to  be  payable  prior  to  the  age  of  55  years.     If  the  pur- 
chaser  of   an    annuity   dies  before   it  becomes   payable,   all 
amounts  paid   in  by  him.  with  compound  interest  at  3  ]ior 
cent.,  are  returned  to  his  heirs.      The  governor  and  the  coun- 
cil  are  empowercnl   to  uiake  regulations  for  putting  the  an- 
nuity system  into  operation,  as  to  the  rate  of  interest  to  be 


:  1910.] 


HOUSE  — No.  1400. 


117 


allowed,  the  preparation  of  tables  for  determining  the  values 
of  annuities,  the  forms  of  contract,  the  selection  of  agents  to 
administer  the  act,  the  modes  of  proving  age  and  identity, 
the  methods  of  paying  annuities,  and  so  on. 

The  administration  of  the  act  has  been  placed  under  the 
charge  of  a  superintendent  of  government  annuities,  in  the 
department  of  trade  and  commerce.  Various  kinds  of  an- 
nuities are  otfered,  including  two  main  groups,  namely :  plan 
A,  under  which,  in  the  event  of  the  death  of  the  purchaser 
before  the  first  payment  of  the  annuity  falls  due,  the  total 
amount  which  has  been  paid  in,  with  3  per  cent,  compound 
interest,  is  refunded  to  the  heirs;  plan  B,  under  which  no 
return  to  the  heirs  is  made  in  the  event  of  death  of  the  pur- 
chaser before  the  annuity  becomes  due,  and  the  annuities  are 
correspondingly  larger  than  under  plan  A. 

According  to  the  manner  of  payment  of  premiums,  three 
different  forms  of  annuity  may  be  distinguished  in  each 
group,  namely :  the  weekly  payment,  the  yearly  payment,  and 
the  single  payment.  The  rates  for  males  under  the  two  plans 
are  illustrated  in  the  following  tables,  the  rates  for  females 
being  somewhat  higher :  — 


Weekly  Payment. 
Amounts  of  annuities  to  be  obtained  by  payments  of  25  cents  a 
week  ($13  a  year)  from  age  last  birthday  to  age  when  annuity 
becomes  iiayable.     Larger  pajTnents  would  secure  larger  annui- 
ties. 

Plan  A. 


Amount  of  Annuity  payable  at  Age  — 

Age  Last  Hirthday. 

55 

60 

65 

70 

20,  . 
26, 

30. 
35, 
40, 
45. 
50, 

S85  58 
64  57 
47  56 
33  78 
22  59 
13  49 
6  07 

$129  91 
99  34 
74  73 
54  90 
38  90 
25  96 
15  47 

$203  52 
156  63 
119  17 
89  22 
65  25 
46  04 
30  62 

$336  66 
258  95 
197  52 
148  97 
110  59 
80  25 
56  24 

118 


OLD   AGE   PENSIONS. 


[Jan. 


Plan  B. 


Age  Last  Birthday. 

Amount  of  Annuity  payable  at 

Age  — 

55 

60 

65 

70 

20 

$107  37 

$176  38 

$307  88 

$589  94 

25 

79  38 

132  35 

233  30 

449  83 

30, 

57  15 

97  38 

174  06 

338  55 

35, 

39  55 

69  70 

127  18 

250  47 

40 

25  68 

47  89 

90  23 

181  06 

45, 

14  82 

30  82 

61  31 

126  73 

50 

6  41 

17  59 

38  90 

84  63 

Yearly  Payment. 
Yearly  payments,  made  half-yearly  (or  more  frequently  if  desired), 
required  for  the  purchase  of  an  annuity  of  $100.     Cost  of  larger 
amounts  in  same  proportion. 

Plan  A. 


Age  Last  Birthday. 

Yearly  Payments  required  to  be  made  for  an 
Annuity  of  $100  at  Age  — 

55 

60 

65 

70 

20 

$15  19 

$10  01 

$6  39 

$3  86 

25, 

20  13 

13  09 

8  30 

5  02 

30 

27  33 

17  40 

10  91 

6  58 

35 

38  49 

23  68 

14  57 

8  73 

40 

57  56 

33  42 

19  92 

11  76 

45 

96  40 

50  08 

28  24 

16  20 

50 

214  27 

84  01 

42  45 

23  12 

Plan  B. 


20, 

$12  11 

$7  37 

$4  22 

$2  20 

25. 

16  38 

9  82 

5  57 

2  89 

30 

22  75 

13  35 

7  47 

3  84 

35 

32  87 

18  65 

10  22 

5  19 

40 

50  62 

27  14 

14  41 

7  18 

45 

87  69 

42  18 

21  20 

10  26 

50 

202  69 

73  90 

33  42 

15  36 

1910.] 


HOUSE  — No.  1400. 


119 


Single  Payment. 

Amouuts  of  annuities  to  be  obtained  by  a  single  payment  of  $100 
at  various  ages  given  below,  the  annuity  to  be  payable  at  age 
5.5,  60,  65  or  70.  The  cost  of  each  additional  $100  or  fraction 
of  $100  will  be  relatively'  the  same. 

Plan  A. 


Age  Last  Birthday. 


Amount  of  Annuity  payable  at  Age 


55 


60 


65 


70 


20, 
25, 
30. 
35, 

40, 
45. 
50, 


$35  66 
28  85 
23  37 
18  95 
15  40 
12  54 
10  24 


$52  04 
41  89 
33  74 

27  21 
21  98 
17  80 
14  45 


$80  18 
64  06 
51  21 
40  97 
32  82 
26  33 
21  18 


$133  71 
105  76 
83  63 
66  12 
52  29 
41  39 
32  82 


Plan  B. 


20 

$47  60 

$74  87 

$126  82 

$238  25 

25 

37  89 

59  59 

100  94 

189  62 

30 

30  03 

47  23 

80  00 

150  29 

35 

23  71 

37  30 

63  18 

118  69 

40 

18  63 

29  29 

49  62 

93  23 

45 

14  51 

22  81 

38  65 

72  60 

50 

11  15 

17  54 

29  71 

55  81 

An    iiinnediate   aimuity   is   also  offered   at   the   following 
rates : — 


120 


OLD   AGE   PENSIONS. 


[Jan. 


Immediate  Annuity  Rates. 
Amount  required  for  life  annuity  of  $100,  payable  quarterly,  first 
instalment  to  be  paid  three  months  after  purchase.     Each  addi- 
tional $100  at  same  rate. 


Age  Last  Birthday. 


Males. 


Females. 


65, 
60, 

65, 
70, 

7r), 

80, 
81, 
82, 
83, 


.i;i,299 
1,156 
994 
825 
664 
521 
521 
521 
521 


Premiums  may  be  paid  to  the  department  direct  or  to  the 
postmaster  of  any  money  order  office.  The  postmaster  is  al- 
lowed a  commission  of  Y^  of  1  per  cent,  on  all  amounts  paid 
to  him.  An  annuity  may  be  purchased  by  (U-  for  any  per- 
son between  the  ages  of  5  and  85,  but  no  annuity  may  be 
paid  before  the  annuitant  reaches  the  age  of  55.  The  rights 
of  an  annuitant  are  not  saleable  or  transferable,  except  to 
the  extent  that  a  purchaser  may  have  a  portion  of  his  an- 
nuity, not  exceeding  one-half,  made  payable  to  his  wife. 

In  reply  to  inquiries  from  employers  regarding  the  pro- 
vision of  annuities  for  their  employees,  the  department  has 
devised  a  plan  by  which  the  two  parties  may  co-operate  in 
the  purchase  of  annuities.  The  following  table  has  been 
furnished  by  the  superintendent  of  annuities,  as  an  example 
of  the  cost  of  $250,  to  begin  at  age  60,  for  men  commencing 
to  pay  between  the  ages  of  21  and  50,  with  the  assistance  of 
a  contribution  from  the  employer :  — 

Examples  of  the  Cost  of  an  Annuity  of  $250  where  Employer 
AND  Employee  co-operate.  Annuity  to  begin  at  Age  60, 
Payments  to  be  made  from  Commencing  Age  to  Age  60. 

Column  1  shows  amount  of  annuity  which  a  payment  by  the  em- 
ployer of  $10  a  year  from  commencing  age  to  age  60  would  pur- 


1910.] 


HOUSE  — No.  1400. 


121 


chase  on  plan  B,  under  which  plan  there  would  be  no  return  of  any 
portion  of  purchase  money  should  annuitant  die  before  60. 

Column  2  shows  the  amount  remaining  to  be  purchased  by  the 
employee  to  bring  annuity  up  to  $250. 

Columns  3  and  4  show  the  annual  rate  to  be  paid  on  plan  A  or  B 
to  purchase  amount  of  annuity  in  column  2.  (On  plan  A,  should 
annuitant  die  before  60,  all  payments  made,  with  3  per  cent,  com- 
pound interest,  would  be  returned  to  the  purchaser  or  his  legal 
representatives. ) 


Commencing  Age  — 

1  — B. 

2. 

3  — A. 

4  — B 

21,   ..    . 

$128  20 

$121  80 

$12  85 

$9  50 

25 

101  83 

148  17 

19  40 

14  55 

30 

74  90 

175  10 

30  47 

23  38 

35 

53  62 

196  38 

46  50 

36  62 

40 

36  85 

213  15 

71  23 

57  85 

45 

23  71 

226  29 

113  33 

95  45 

50 

13  53 

236  47 

198  66 

174  75 

The  total  iiinnber  of  annuity  contracts  issued  during  the 
first  seven  months  of  the  operation  of  the  system,  ending 
July  31,  1909,  was  288,  aggregating  $65,022.80,  and  the 
]»urchase  money  received  for  them  was  $206,410.15.  The 
number  included  44  immediate  annuities,  amounting  to  $11,- 
121.80,  at  a  cost  of  $108,923.80,  and  244  deferred  annuities, 
amounting  to  $53,901,  on  which  $97,486.35  had  been  re- 
ceived in  premiums. 

The  de])artment  is  making  vigorous  efforts  to  bring  the  an- 
nuity system  to  the  general  attention  of  working  people  and 
their  employers.  Organizers  and  lecturers  are  employed  to 
advertise  the  advantages  of  the  scheme.  Thus  far  these  ef- 
forts a]>pear  to  have  met  with  moderate  success. 

The  printed  pamphlet  explaining  the  provisions  of  the 
annuities  act  recently  issued  by  the  department  contains  this 
suggestive  reference  to  the  British  old  age  pension  act :  — 


•fet?^ 


Much  of  the  extreme  poverty  and  destitution  in  Great  Britain, 
which  has  been  shown  by  the  recent  pension  act  to  exist,  would  have 
been  impossible  had  there  been  a  general  adoption  of  a  scheme  like 
the  Canadian  scheme  in  England  half  a  century  ago.  The  men  and 
women  who  are  now  on  the  •'  i)aui)erizing  pension  roll  "  could  have 


122  OLD   AGE   PENSIONS.  [Jan. 

preserved  their  self-respect  and  independence,  and  the  enormous 
annual  drain  on  the  public  treasury,  which  amounts  to  nearly 
$50,000,000,  would  probably  have  been  avoided.  If  Canada  is  not 
ultimately  to  face  the  same  conditions  as  exist  in  England  and  many 
other  European  countries,  the  people  of  small  income  must  make 
definite  provision  for  their  old  age. 

(1)    Austria. 

The  law  of  December  16,  1906,  provides  a  limited  system 
of  contributory  old  age  and  invalidity  insurance,  applying 
only  to  a  certain  class  of  salaried  employees.  The  persons 
that  are  compelled  to  insure  under  the  law  are  private  of- 
ficials (Privat-beamten),  with  monthly  or  yearly  salary  of  at 
least  600  kronen^  per  annum  ($120),  and  public  employees 
without  other  regular  claim  to  pensions.  The  obligation  to 
insure  begins  with  the  completion  of  the  eighteenth  year. 
The  law  specifically  exempts  from  the  insurance  obligation 
persons  employed  in  industry,  mining,  agriculture  and  for- 
estry. In  fine,  the  law  applies  to  clerks  and  other  salaried 
employees  of  the  middle  class.  It  is  not  a  system  of  work- 
ing class  insurance. 

The  general  principle  on  which  the  insurance  is  admin- 
istered is  the  same  as  that  of  the  German  compulsory  in- 
surance. The  insured  are  divided  into  six  salary  classes. 
The  amount  of  the  contribution  varies  according  to  the  sal- 
ary class.  The  employer  pays  two-thirds  of  the  premium  in 
the  four  lower  classes,  and  one-half  of  the  premium  in  the 
two  higher  classes.  The  amount  of  insurance  also  depends 
on  the  salary  class,  and  on  the  length  of  time  during  which 
contributions  have  been  paid.  The  insurance  provided  in- 
cludes not  only  age  pensions,  but  also  invalidity  allowances, 
widows'  benefits,  and  special  payments  toward  the  educa- 
tion of  orphaned  children.  A  contributory  period  of  four 
hundred  and  eighty  months,  or  forty  years,  is  required  as 
the  condition  of  receiving  an  old  age  pension. 

A  government  bill  was  laid  before  the  House  of  Repre- 
sentatives on  November  3,  1908,  which  provides  a  sweeping 
scheme  of  general  old  age  and  sickness  insurance.  This  bill 
has  not  yet  been  enacted  into  law.     The  principal  features  of 

1  In  Austria  a  krone  is  equivalent  to  $0,203. 


1910.]  HOUSE  — No.  1400.  123 

the  proposed  plan  are  described  in  a  special  report  drawn  up 
under  the  direction  of  the  Austrian  Ministry  of  Foreign  Af- 
fairs, at  the  request  of  this  commission.  The  substance  of 
this  official  report  is  as  follows :  — 

Report. 

The  chief  characteristic  of  the  government  bill  for  insurance 
against  old  age  and  sickness  lies  in  its  enormous  scope.  It  is  pro- 
posed in  this  country  to  extend  old  age  insurance  not  only  to  in- 
dustrial and  agricultural  classes,  but  also  to  all  those  engaged  in 
commercial  and  industrial  pursuits  who  are  not  actually  dependent 
on  wages,  provided  that  their  incomes  do  not  exceed  a  fixed  limit, 
and  provided  the  number  of  employees  in  their  service  does  not  ex- 
ceed two.  In  order,  therefore,  to  appreciate  the  scope  of  the  bill, 
it  is  necessary  to  bear  constantly  in  mind  the  main  distinction  which 
is  drawn  between  selbstandige,  or  non-wage  earners,  and  unselb- 
standige,  or  wage-earning  workmen. 

It  is  calculated  that  nearly  10,000,000  will,  under  this  measure, 
j  fall  within   the   scope   of  old   age   insurance.      (The   population   of 
I  Austria  is,  roundly,  45,000,000.)      This  number  is  estimated  to  be 
divisible  as  follows :  — 

Independent  small  tradesmen    (including  farmers,  agents, 

etc.), 2,520,000 

Workmen,  oj^eratives,  servants, 5,099,000 

^lembers  of  workmen's  families  assisting  in  labor,  .         .  1,718,000 

Whilst  the  working  classes,  i.e.,  those  dependent  on  wages,  are 
to  be  insured  both  against  old  age  and  sickness,  the  independents 
(selbstandige)  are  to  be  insured  against  old  age  only,  to  the  exclu- 
sion of  disablement  and  sickness. 

The  bill  provides  for  the  payment  of  old  age  pensions  on  comple- 
tion of  the  sixty-fifth  year.  For  the  acquirement  of  an  old  age 
l)ension,  wage  earners  must  have  been  insured  for  a  period  of  thirty 
years;  but  in  the  case  of  workmen  who,  under  the  bill,  will  become 
liable  to  insurance  at  more  advanced  years,  this  term  is  shortened  to 
a  pei'iod  of  subscription  covering  two  hundred  weeks. 

Independents  (selbstandige)  over  65  years  of  age  need,  however, 
have  been  insured  for  a  period  of  only  four  years  in  order  to  obtain 
an  old  age  pension  calculated  on  the  basis  of  a  period  of  subscrip- 
tion covering  two  hundred  weeks;  and  this  class,  therefore,  enjoys, 
in  the  matter  of  old  age  pensions,  a  considerable  advantage  over 
wage  earners.  They  are,  however,  as  before  stated,  excluded  from 
pensions  on  account  of  sickness  or  disablement. 


124  OLD   AGE   PENSIONS.  [Jan. 

Insurance  is  compulsory  in  the  case  of :  — 

i.  Wage  Earners  {Unselbstdndige) .  —  This  inckides  all  those 
in  the  working  classes,  of  both  sexes.  Liability  to  insurance  and 
weekly  subscription  for  that  purpose  begin  with  the  sixteenth  year. 
Persons  already  over  16  years  of  age,  or  already  infinn,  as  well  as 
persons  in  receijDt  of  monthly  or  yearly  wages  exceeding  2,400  kronen 
($400),  are  exempted  from  liability  to  insurance. 

2.  Selhstcindige  (Independents).  —  This  includes  all  persons  en- 
gaged in  industrial  or  agricultural  pursuits  who  are  in  receipt  of  a 
yearly  income  not  exceeding  2,400  kronen,  or  who  do  not  habitually 
employ  more  than  two  workmen  outside  the  family. 

The  old  age  pension  funds  are,  under  the  bill,  to  be  derived 
partly  from  premium  payments  by  the  insured  and  partly  from  State 
contributions.  The  bill  provides,  however,  for  voluntary  increases 
in  the  amount  of  subscriptions  paid,  by  means  of  which  both  a  larger 
and  an  earlier  pension  is  obtainable. 

Women  obtain  on  marriage  a  refund  of  half  the  amount  of  sub- 
scriiDtions  paid,  provided  such  subscriptions  have  already  covered  a 
period  of  two  hundred  weeks.  In  case  of  death  of  the  insured,  a 
release  of  the  insurance  capital  is  gTanted  to  the  relatives,  claims 
to  such  release  being  held  in  the  first  instance  by  the  widow;  then 
by  legitimate  children  under  16  years  of  age;  illegitimate  children 
after  the  death  of  the  mother  and  after  that  of  the  father,  provided 
paternity  has  been  recognized  by  law;  parents  of  the  deceased; 
brothers  and  sisters  under  16  years  of  age;  and  gTandchildren  whom 
the  deceased  has  maintained. 

Release  of  insurance  capital  is,  however,  made  to  depend  on  the 
termination  of  a  period  of  contribution  covex'ing  forty  weeks.  The 
amount  of  insurance  capital  released  is  computed  according  to  the 
wage  divisions  and  to  the  number  of  children  left,  —  widows  with 
two  children  being  granted  a  release  proportionately  larger  than 
widows  with  one  child  only. 

The  State  contribution  to  pensions  is,  under  the  bill,  fixed  at  90 
kronen  per  pensioner,  whether  dependent  or  independent;  but  this 
State  contribution  becomes  payable  in  each  individual  ease  only  on 
the  termination  of  a  jDeriod  of  subscription  covering  two  hundred 
weeks. 

With  regard  to  the  financial  aspect  of  this  scheme  of  insurance, 
it  is  calculated  that  the  annual  subscriptions  of  6,000,000  workmen 
dependent  on  wages  Avill  amount  to  just  over  100.000.000  kronen 
($20,000,000)  ;  while  the  annual  subscription  to  the  independent 
class  will  amount  to  28,000,000  kronen  ($5,600,000).  This  amount  is 
to  be  supplemented  by  a  fixed  annual  payment  for  the  State  of 
2,000,000  kronen  ($400,000).  This  annual  payment  will,  as  stated, 
be  augmented  on  the  expiration  of  four  years  by  a  contribution  from 


1910.] 


HOUSE  — No.  1400. 


125 


the  State  of  90  kronen  ($18)  per  bead  insured;  so  that  it  is  calcu- 
lated that  after  ten  years  the  State  will  be  contributing  13,000,000 
kronen  ($2,000,000)  toward  the  insurance  of  wage  earners, 
23,000,000  kronen  ($4,600,000)  toward  that  of  the  independent  class, 
and  that  this  sum  will  be  further  increased  on  the  termination  of 
the  twentieth  year  to  27,000,000  ($5,400,000)  and  48,000,000  kronen 
($9,000,000),  respectively,  and  on  the  termination  of  the  fortieth 
yeaj-  will  reach  a  total  of  91,000,000  kronen   ($18,200,000). 

After  the  expiration  of  forty  yeais  it  is  calculated  that  the  total 
disbursements  entailed  by  this  scheme  of  insurance  will  be  as  fol- 
lows :  — 


Million 
Kronen. 

Million 
Dollars. 

Old  age  pensions  to  the  independent  class, 

Old  age  and  sickness  pensions  to  wage-earning  class 

Released  insurance  capital  on  death  of  insured, 

Refund  of  insurance  subscription  on  marriage, 

Cost  of  administration,          ...... 

99.25 
174.00 

27.00 
4.50 
1.25 

19.85 

34.80 

5.40 

.90 

.25 

Total 

306.00 

61.20 

This  bill  is  certainly  a  very  remarkable  and  far-reaching  social 
measure.  It  is  well  known  that  the  policy  of  the  Christian  Social- 
ists, a  policy  which  is  said  to  be  fully  endorsed  by  the  heir  apparent, 
lies  in  the  dii-ection  of  a  Democratic  Imperialism,  and  of  the  erection 
at  Vienna  of  a  centre  of  gi-avity  around  which  it  is  hoped  that 
Slav  unity  will  one  day  crj'stallize.  It  is  impossible  not  to  see  in 
tliis  huge  insurance  scheme  a  decided  step  towards  the  practical 
realization  of  this  ])rogTessive  policy,  whose  advent  was  heralded 
by  the  introduction  of  universal  suffrage,  and  whose  outward  visible 
sign  has  recently  become  manifest  in  territorial  aggrandizement. 

It  remains,  however,  to  be  seen  whether  the  uigantic  expenditure 
involved  by  this  scheme  and  the  exti'eme  difficulty  of  introducing 
compulsory  insurance  in  the  poor  peasant  districts  of  Galicia, 
Bukowina,  Dalmatia  and  the  Tyrol,  will  bring  the  measure  williiii 
the  domain  of  practical  politics. 


3.     Pension  Leotst,atton  tx  TirK  United  States. 

(a)    National  Legislation  relating  chiefly  to  Military  Pensions. 

T^ational  pension  legislation  in  the  T'nitorl  States  is  con- 
fined entirely  to  jn-ovision  for  military  pensions,  with  the 
exception  of  the  retirement  pensions  for  United  States  jus- 


126  OLD   AGE   PENSIONS.  [Jan. 

tices.  During  recent  years  a  movement  in  favor  of  the  es- 
tablishment of  a  system  of  civil  pensions  for  employees  of 
the  national  government  has  gathered  headway.  The  United 
States  is  the  only  one  of  the  leading  nations  that  has  not 
adopted  some  retirement  system  for  its  employees.  The  in- 
stitution of  such  a  system  has  been  urged  in  the  interest  of 
efficiency  and  economy  in  the  civil  service,  and  was  ♦rec- 
ommended by  President  Taft  in  his  message  of  December, 
1909.  Up  to  the  present  time,  however,  no  legislaticai  has 
yet  been  placed  upon  the  statute  books  relating  to  civil  pen- 
sions. 

The  policy  of  military  pensions  was  adopted  early  in  the 
history  of  the  nation  by  legislation  pensioning  soldiers  of  the 
revolutionary  war.     Later  pension  acts  have  provided  suc- 
cessively for  veterans  of  the  war  of  1812,  the  Mexican  war 
and  the  Spanish  war.     The  first  pension  measure  for  soldiers 
of  the  civil  war  was  passed  July  14,  1862.     This  law  pro- 
vided pensions  for  disabled  soldiers,  and  for  widows,  orphan 
children  and  dependent  mothers  of  deceased  soldiers.     The 
amount  of  the  pension  varied  from  $8  to  $30  per  month. 
The  arrears  act  of  1879  increased  greatly  the  expenditui-e  for 
pensions.     This  act  provided  that  the  first  payment  of  any 
pension  should  include  back  pension  money  from  the  time 
the  disability  was  incurred  to  the  date  of  the  receipt  of  the 
pension,  provided  that  the  application  for  the  pension  were 
made  prior  to  July  1,  1880.     An  act  of  1890  further  ex- 
tended the  system  by  granting  pensions  to  all  who  had  served 
ninety  days  in  the  civil  war,  and  were  suffering  from  mental 
or  physical  disability  of  a  permanent  character,  which  inca- 
pacitated them  for  performing  manual  labor.     The  amount 
of  the  pensions  ranged  from  $6  to  $12  per  month.     Widows 
of  soldiers  who  had  served  ninety  days  were  granted  pen- 
sions at  the  rate  of  $8  per  month.     The  number  of  pension- 
ers on  the  roll  of  1908  was  951,687,  and  the  total  amount 
paid  in  pensions  was  $153,093,086.27.     The  survivors  of  the  | 
civil  war  constitute  about  65  per  cent,  of  the  total  number  of 
pensioners. 

The  national  government  has  also  provided  retirement  pen- 
sions for  officers  and  enlisted  men  in  the  regular  army  and 


1910.]  HOUSE  — No.  1400.  127 

navy.  The  first  retirement  act  for  the  army  was  passed  in 
1861.  Since  that  date  numerous  amending  and  extending 
laws  have  been  enacted.  The  present  provisions  relating  to 
the  retirement  of  officers  are  as  follows:  (1)  Any  officer  who 
has  served  for  forty  years  shall  be  retired  on  making  appli- 
cation to  the  President,  and  any  officer  who  has  served  thirty 
years  may  be  retired  on  his  application,  at  the  discretion  of 
the  President.  (2)  Officers  who  have  served  forty-five  years, 
or  have  reached  the  age  of  62,  may  be  retired,  at  the  dis- 
cretion of  the  President.  (3)  All  officers  who  have  reached 
the  age  of  64  years  must  be  retired,  without  option.  (4) 
Officers  permanently  disabled  in  the  service  shall  be  retired 
on  pension.  Thus,  in  the  army,  retirement  is  compulsory  for 
officers  at  64,  and  voluntary  at  an  earlier  age,  after  certain 
periods  of  service.  Enlisted  men  in  the  army  may  be  pen- 
sioned after  thirty  years  of  service,  upon  application  to  the 
President. 

The  amount  of  pension  in  the  case  of  both  officers  and  men 
is  three-quarters  of  the  pay  received  at  the  time  of  retirement. 
The  provisions  governing  retirement  in  the  navy  are  simi- 
lar to  those  in  the  army.  The  main  difference  is  that  the 
age  of  compulsory  retirement  is  62  instead  of  64  years.  Of- 
ficers who  have  reached  the  age  of  62  must  be  placed  upon 
the  retired  list,  with  the  exception  of  certain  grades  for  which 
retirement  is  provided  only  in  the  case  of  permanent  dis- 
ability. After  forty  years  of  service,  retirement  is  per- 
missible, upon  the  application  of  the  officer.  Enlisted  men 
who  have  served  thirty  years  may  be  retired  upon  applica- 
tion to  the  President,  provided  the  applicant  has  reached  the 
age  of  50  years.  In  case  of  disability,  accident  or  sickness, 
which  incapacitates  an  officer  or  a  man  for  the  performance 
of  his  duty,  he  may  be  retired  with  three-quarters  pay,  if  an 
officer,  or  with  a  pension  which  is  adjudicated  by  the  pension 
bureau,  if  an  enlisted  man. 

The  regular  pension,  as  in  the  army,  is  three-quarters  of 
the  pay. 

Outside  of  the  military  pensions  just  described,  the  only 
other  legislation  in  this  field  is  that  relating  to  the  retire- 
ment of  justices  of  the  United  States  courts.     Any  judge  of 


128  OLD   AGE   PENSIONS.  [Jan.  ' 

any  court  of  the  United  States  who  resigns  his  office,  after 
having  held  his  commission  at  least  ten  years,  and  after  hav- 
ing attained  the  age  of  75  years,  is  paid  during  the  remain- 
der of  his  life  the  amount  of  salary  that  he  was  receiving  at 
the  time  of  his  resignation. 

(b)  Pension  Legislation  in  Various  States. 
No  American  State  has  enacted  any  law  establishing  a 
general  system  of  old  age  pensions.  Many  southern  States 
have  statutes  providing  pensions  for  confederate  veterans, 
and  some  northern  States  have  laws  granting  special  aid 
to  soldiers.  This  class  of  legislation,  however,  hardly  falls 
within  the  scope  of  the  investigation  of  this  commission. 
The  only  legislation  thus  far  enacted  in  this  country  which 
strictly  concerns  the  subject  of  inquiry  of  this  commission 
relates  to  pensions  for  firemen,  policemen,  teachers^  and  cer- 
tain other  public  employees.  Following  is  a  digest  of  this 
State  pension  legislation :  — 

Illinois. 

Pensions  for  Firemen.  —  Chapter  24  of  the  Revised  Statutes  pro- 
vides for  the  establishment  of  a  firemen's  pension  fund  in  cities  of 
50,000  inhabitants  or  more.  The  fund  is  to  be  administered  by  a 
board  of  five  trustees.  All  rewards,  gifts  and  devises  to  members 
of  the  fire  department,  except  those  to  designated  individuals,  are 
turned  into  the  fund.  Members  of  the  department  may  be  retired  for 
physical  or  mental  disability  on  one-half  pay.  A  pension  of  $30 
per  month  is  granted  to  widows  of  men  who  die  in  the  service;  also 
an  allowance  of  $6  per  month  for  each  child  of  a  j^erson  dying  in  the 
service.  A  member  of  the  department  who  has  served  twenty-two 
years  and  is  50  years  of  age  may,  if  he  desires,  have  his  discharge  on 
half  pay.  An  act  passed  in  1905  provides  that  foreign  fire  insurance 
companies  shall  pay  2  per  cent,  of  the  gross  receipts  of  their  local 
agencies  to  the  treasurer  of  the  city,  and  that  50  per  cent,  of  the 
amount  thus  paid  in  shall  go  to  the  firemen's  pension  fund. 

In  1007  the  law  was  amended  to  apply  to  cities  of  5,000  inhabi- 
tants and  over.  The  amending  act  also  reduced  the  required  period 
of  service  from  twenty-two  to  twenty  years.  It  provided  further 
that  1  per  cent,  of  the  receipts  of  all  licenses  in  the  cities  should  be 
paid  to  the  pension  fund. 

Policemen.  —  Chapter  24  of  the  Revised  Statutes  provides  that 
every  city  of  50,000  inhabitants  or  over  shall  set  aside  for  a  police 


•  For  a  special  report  on  teachers'  pensions,  see' Appendix  D. 


1910.]  HOUSE  — No.  1400.  129 

pension  fund  the  following-  amounts:  3  per  cent,  of  the  receipts 
from  dog-  license;  3  per  cent,  of  the  receipts  from  liquor  license; 
all  fines  inflicted  on  policemen:  one-fourth  of  the  receipts  from 
brokers'  license;  all  rewards  given  to  the  police  department;  all 
fines  for  carrying  concealed  weapons;  3  per  cent,  of  the  receipts 
from  all  licenses  not  mentioned  in  the  act ;  1  per  cent,  monthly  of 
the  salary  of  members  of  the  police  department,  A  board  of  five, 
to  be  appointed  by  the  mayor,  administers  the  fund.  Pensions 
are  jiaid  to  members  of  the  department  over  50  years  of  age  who  have 
served  thirty  years ;  also  to  those  who  are  physically  disabled  in 
the  service.  The  amount  of  the  pension  is  one-half  pay.  Grants  of 
'  $600  to  $900  are  provided  for  widows  of  policemen  killed  or  fatally 
)  injured  in  the  discharge  of  duty. 

!      Employees  of  Water  Department.  —  An  act   of   1905  establishes 
j  a  pension  fund  for  employees  of  water  works  and  water  departments 
I  of  cities  who  receive  $65  jier  month  and  more.     The  pension  board 
!  consists   of   the  mayor,   the   comptroller,   and   four  employees   con- 
■  tributing  to  the  fund,  to  be  elected  by  ballot  by  the  contributors. 
j  The  amount  to  be  contributed  to  the  fund  by  employees  is  determined 
\  by  the  board,  but  shall  not  be  less  than  1  per  cent,  or  more  than  2 
\  per  cent,  of  the  yearly  salary.     The  amount  of  the  pension  is  also 
fixed  by  the  board,  but  shall  not  be  more  than  50  per  cent,  of  the 
salary.     Any   contributor  to   the   fund,  50  years   of   age,   who   has 
served  thirty  years  and  has  paid  contributions  for  ten  years  is  en- 
titled to  retirement  on  one-half  pay.     Pensions  of  smaller  amount 
are  provided  for  persons  who  have  contributed  five  years.     The  sum 
of  $300  is  paid  to  the  widow  of  a  beneficiary. 

Emploi/ees  of  Public  Libraries.  —  An  act  of  1905  provides  that 
each  city  shall  establish  a  pension  fund  for  library  employees.  Any 
contributor  to  the  fund,  55  years  of  age,  who  has  served  ten  years 
and  contributed  regularly  to  the  fund,  may  retire  on  pension.  A 
board  of  five  trustees  administers  the  fund.  The  board  determines 
the  amount  of  the  employees'  contributions,  which,  however,  shall 
not  be  less  than  $6  nor  more  than  $4S  per  year.  The  board  also 
fixes  the  amount  of  the  pension,  which,  however,  must  be  propor- 
tionate to  the  amount  of  contributions  in  each  case. 

Louisiana. 
Pension  Fund  for  Firemen.  —  An  act  of  1905,  No.  43,  requires 
the  citj^  of  New  Orleans  to  set  aside  1  per  cent,  of  all  the  revenues 
from  licenses,  to  establish  a  pension  fund  for  disabled  firemen.  A 
board  of  trustees  of  five  members  is  created  to  administer  the  fund. 
All  receipts  from  insurance  company  taxes  are  to  be  paid  into  the 
fund,  also  fines  inflicted  on  firemen  and  rewards  given  to  the  fire 
department  for  meritorious  ser\'ice.     Permanently  disabled  firemen 


130  OLD   AGE   PENSIONS.  [Jan. 

are  retired  on  half  pay.  The  widow  of  any  fireman  who  is  killed  or 
dies  in  the  service  receives  $15  per  month ;  there  is  also  an  allow- 
ance of  $6  per  month  for  each  child  in  such  a  case. 

Massachusetts.^ 

Pensions  for  Firemen.  —  Chapter  32  of  the  Revised  Laws,  section 
81,  dating-  from  1898,  provides  that  on  the  petition  of  not  less  than 
200  voters  of  a  city  the  question  of  accepting  the  terms  of  this  act 
shall  be  submitted  to  vote.  If  the  act  be  accepted  by  the  voters, 
the  city  council  may  then  pension  any  fireman  for  permanent  dis- 
ability incuiTed  in  the  service,  on  such  tenns  as  may  be  prescribed 
by  vote  or  by  ordinance.  Section  82  of  chapter  32,  dating  from 
1900,  provides  for  age  and  service  pensions;  any  fireman  who  has 
served  twenty  years  and  who  is  65  years  of  age  or  is  incapacitated 
for  service  may  be  so  pensioned. 

Policemen.  —  Chapter  108  of  the  Revised  Laws-,  sections  29  and 
30,  dating  from  1892,  provides  that  in  cities,  except  Boston,  of 
75,000  population,  the  mayor  and  aldennen  may,  if  the  city  council 
has  accepted  the  provisions  of  this  act,  retire  any  member  of  the 
police  department  who  is  65  years  of  age  and  has  served  fifteen 
years,  or  who  has  been  permanently  disabled  in  the  actual  discharge 
of  his  duty.  The  amount  of  retirement  allowance  shall  not  exceed 
one-half  of  the  annual  earnings.  Section  31,  chapter  108,  provides 
for  the  compulsoiy  retirement  of  officers  disabled  in  the  discharge 
of  their  duty,  on  one-half  pay  in  cities  accepting  this  provision  and 
having  no  regailar  pension  system. 

In  1903,  by  chapter  428,  the  provisions  for  police  pensions  were 
extended  to  any  city,  —  not  merely  to  cities  of  75,000  or  more  in- 
habitants. It  was  further  provided  that  twenty  years'  service  and 
disablement  should  entitle  a  member  of  the  department  to  pension, 
regardless  of  age. 

Chapter  108  of  the  Revised  Laws,  section  31,  dating  from  1901, 
requires  that  in  cities  which  by  vote  of  the  city  council,  and  in 
towns  which  by  vote  of  the  inhabitants,  accept  the  provisions  of  the 
section,  the  board  or  officer  having  authority  to  make  appointments 
to  the  police  department  shall  retire  any  member  who  is  certified 
by  i^hysicians  to  be  permanently  incapacitated,  through  injury  sus- 
tained in  the  service.  A  member  so  retired  receives  one-half  the 
compensation  paid  him  at  the  time  of  retirement. 

In  1904,  by  chapter  327,  the  selectmen  of  any  town  accepting  the 
provisions  of  the  act  are  required  to  retire  and  pension  any  member 
of  the  police  and  fire  departments  permanently  incapacitated  through 

1  The  special  pension  measures  for  the  city  of  Boston  are  not  included  in  this  section, 
but  are  described  in  the  later  chapter  dealing  with  "Pension  Systems  in  American 
Cities." 


1910.]  HOUSE  — No.  1400.  131 

injury  iu  the  service;  and  are  authorized  to  retire  any  member  60 
years  of  age  who  has  served  faithfully  for  twenty-five  years.  The 
pension  in  each  case  is  one-half  of  the  compensation  last  received 
by  the  retired  employee.  Acceptance  of  the  act  requires  a  two-thirds 
majority  of  voters  voting  thereon  at  tOAvn  meeting. 

In  1907,  by  chapter  141,  pensions  were  provided  for  widows  and 
children  of  members  of  fire  and  police  departments  killed  in  the 
service,  to  the  amount  of  not  more  than  $300  per  year. 

In  1909,  by  chapter  453,  provision  was  made  for  the  pensioning  of 
metropolitan  park  police  officers.  The  Park  Commission  is  required 
to  pension  any  officer  permanently  disabled,  who  requests  retirement, 
and  anv  officer  who  has  served  faithfully  for  twenty  vears,  if  he  is, 
in  the  judgment  of  the  commission,  incapacitated  for  further  useful 
service.  The  amount  of  the  pension  is  one-half  the  compensation  last 
paid  to  the  officer.  Pensions  are  also  provided  for  widows  and 
children  of  officers  killed  in  the  service,  not  exceeding  $400  in  amount. 
Teachers.  —  In  1908,  by  chapter  498,  cities  and  towns  were  au- 
thorized to  establish  pension  funds  for  teachers  in  the  public  schools. 
The  act  provides  that  any  city  or  town  accepting  its  provisions  shall 
establish  a  fund  for  retiring  teachers.  The  fund  shall  be  made  up 
of  such  revenues  as  may  be  diverted  to  that  purpose.  The  school 
committee  may  retire  any  teacher  of  60  years  of  age  incapacitated  for 
service.     The  pension  shall  not  exceed  one-half  of  the  last  compensa- 

j  tion,  and  in  no  case  shall  exceed  $500.     On  petition  of  5  per  cent. 

I  of  the  voters  of  any  city  or  town,  the  act  is  to  be  submitted  to 
referendum,  and  if  a  majority  of  the  voters  thereon  accept  it,  the 
act  goes  into  effect. 

Other  Employees.  —  In  1906,  by  chapter  474,  pensions  were  es- 
tablished for  judges  of  probate  and  insolvency.  Any  judge  who  has 
reached  the  age  of  60  years  and  has  served  fifteen  years,  and  is  in- 

j  capacitated  for  further  service,  may  retire  on  one-half  salary. 

'  In  1907,  by  chapter  458,  provision  was  made  for  pensioning  vet- 
erans of  the  civil  war  in  the  sen-ice  of  the  Commonwealth.  Any  such 
veteran  if  incapacitated  for  active  duty  shall  be  retired,  with  the 
consent  of  the  Governor,  at  one-half  the  compensation  paid  to  him 
when  in  active  service,  provided  that  no  \eteran  shall  be  so  retired 
unless  he  has  been  in  the  service  of  the  Commonwealth  at  least  ten 
years. 

In  1908,  by  chapter  601,  pensions  were  provided  for  jirison 
officers.  The  Prison  Commissioners  may,  with  the  approval  of  the 
Govei-nor  and  Council,  retire  any  prison  officer  who  is  65  years  of 
age  and  has  served  twenty  years,  or  any  officer  who  is  permanently 
disabled  through  injury  in  the  service,  or  any  officer  who  has  ren- 
dei-ed  thirty  years  of  faithful  service.  The  pension  is  one-half  of 
the  last  compensation. 


132  OLD   AGE   PENSIONS.  [Jan. 

In  1909,  by  chapter  398,  it  was  provided  that  any  veteran  of  the 
civil  war,  in  the  sei-vice  of  any  county  as  clerk  of  court,  might,  if 
incapacitated  for  duty,  be  retrred  by  the  county  commissioners,  with 
the  consent  of  the  Governor,  at  one-half  rate  of  compensation :  pro- 
vided that  no  veteran  should  be  so  retired  unless  he  has  been  in  the 
service  of  the  county  ten  years  and  has  reached  the  age  of  65. 

New  Hampshire. 

Pensions  for  Firemen  and  Policemen.  —  The  act  of  March  26,  1907, 
authorizes  towns  and  cities  to  grant  j^ensions  to  firemen  and  police 
officers  and  constables,  in  case  the  jDrovisions  of  the  enabling  act  are 
accepted  by  the  yoters,  on  jDetition  of  not  less  than  100  registered 
legal  voters  of  a  city,  and  not  less  than  25  registered  legal  voters 
of  a  town.  Eligible  to  pensions  are  fire  and  police  officers  who  have 
been  permanently  disabled  in  the  performance  of  their  duties,  or 
who  have  attained  the  age  of  65  years,  and  have  served  for  not  less 
than  twenty-five  years.  The  amount  of  pension  shall  not  exceed  $300 
per  annum.  No  pension  shall  be  granted  for  more  than  one  year 
at  a  time.  No  municipality  in  the  State  has  yet  taken  advantage  of 
this  act. 

New  Jersey. 

Firemen's  Pension  Fund.  —  Chapter  270,  Laws  of  New  Jerse}', 
provides  for  the  creation  of  a  firemen's  pension  fund.  One-half  of  2 
per  cent,  of  the  premiums  received  by  foreign  fire  insurance  com- 
panies for  local  business  is  to  be  set  aside  for  such  fund.  The  fund 
is  increased  by  fines  assessed  upon  members  of  the  fire  department, 
by  rewards,  fines,  gifts  and  emoluments  for  extraordinary  services,  by 
fees  for  permits,  by  receipts  from  sales  of  old  material,  by  license 
fees  of  theaters,  and,  in  the  event  of  the  fund  being  less  than  $20,000, 
by  assessment  on  members  of  the  dej^artment,  not  to  exceed  1  per 
cent,  of  the  salaries.  Pensions  are  granted  to  members  of  the  depart- 
ment who  have  served  honorably  for  twenty  years,  and  have  reached 
the  age  of  60  years;  to  members  who  have  become  incapacitated 
through  injury  incurred  in  the  discharge  of  their  duties;  to  members 
who  have  served  twenty  years  and  have  become  incapacitated  by  ill- 
ness, injury  or  advanced  old  age.  The  amount  of  the  pension  in  each 
case  is  one-half  of  the  salary  at  the  time  of  retirement.  Widows  of 
members  who  have  served  less  than  five  years  receive  $25  per  month 
for  life,  or  during  widowhood.  Widows  of  members  who  have  served 
at  least  five  years  receive  a  i:)ension  equal  to  one-half  of  the  salary 
of  the  husband,  payable  for  life,  or  during  widowhood.  There  are 
further  provisions  for  widows  of  members  who  have  been  retired  and 
pensioned,  the  amount  paid  to  such  widows  being  equal  to  half  pay. 
Provisions  are  also  made  for  deceased  members'  children  who  are 


1910.]  HOUSE  — No.  1400.  133 

motherless,  or  Avbose  mother  may  have  remarried.  Further  provision 
is  made  for  dependent  parents  of  deceased  members.  In  1908  the 
amount  paid  in  pensions  was  $21,935.71 ;  the  number  of  beneficiaries 

was  42. 

Policemen.  —  ChRTptev  165,  Laws  of  New  Jersey,  establishes  a 
police  pension  fund.  This  fund  does  not  include  appropriations  by 
the  city,  but  is  made  up  of  fines  for  derelictions,  from  donations, 
;  receipts  for  certain  permits,  receipts  through  the  sale  of  unclaimed 
property,  and  an  assessment  of  at  least  1  per  cent,  of  the  salaries  of 
members.  Pensions  are  granted  to  members  permanently  disabled 
through  injury  or  sickness  incurred  in  actual  service,  and  to  those 
who  have  attained  the  age  of  60  years  and  have  served  twenty  years. 
The  pension  amounts  to  one-half  of  the  salary  at  the  time  of  retire- 
ment, provided  the  fund  is  sufficient  for  the  purpose;  if  not,  the 
pensions  are  adjusted  proportionately  to  the  available  amount  of  the 
fund.  Widows  of  members  who  have  lost  their  lives  in  the  service 
receive  the  half -pay  pension  so  long  as  they  remain  unmarried.  In 
case  of  the  death  of  the  Avidow,  unmarried  minor  children  receive  the 
same  pension  until  the  youngest  reaches  the  age  of '14  years. 

New  York. 

The  legislation  relating  to  municipal  pensions  in  this  State  applies 
in  every  case  to  certain  specified  cities.  The  provisions  for  New 
York  city  are  described  in  the  section  dealing  with  pension  systems 
of  cities. 

Pennsylvania. 

Fire  and  Police  Pension  Fund.  —  The  act  of  June  1,  1885,  known 
as  the  Bullitt  bill,  which  is  in  reality  the  charter  of  the  city  of  Phila- 
delphia, provides  that  a  pension  fund  shall  be  created  and  established 
by  ordinance;  to  be  maintained  by  an  equal  and  proportionate 
monthly  charge  made  against  each  member  of  the  fire  and  police 
force.  The  fund  is  to  be  administered  by  the  commissioners  of  the 
sinking  fund,  and  applied,  on  such  terms  and  regulations  as  the  city 
council  may  by  ordinance  prescribe,  for  the  benefit  of  such  members 
of  the  fire  and  police  forces  as  shall  receive  honorable  discharges  for 
age  or  disability,  and  the  families  of  such  as  may  be  injured  or 
killed  in  the  service.  Tlie  allowances  are  in  conformity  with  a  uni- 
form scale. 

Police  Pension  Fund.  —  An  act  of  May  24,  1893,  authorizes  cities 
to  maintain  a  police  pension  fund  by  assessing  equal  and  propor- 
tionate monthly  charges  against  members  of  the  force,  not  to  exceed 
3  per  cent,  of  their  pay.  The  condition  for  the  receipt  of  pension  is  a 
minimum  jieriod  of  service  of  twenty  years;  the  amount  of  i)ension  is 
not  to  exceed  one-half  of  the  pay. 


134  OLD  AGE   PENSIONS.  [Jan. 


Rhode  Island. 

Fire  and  Police  Pensions  for  Providence.  —  Chapter  1231,  Acts 
of  1893,  ai;thorizes  the  city  council  of  Providence  to  create  and 
administer  a  pension  fund  for  members  of  the  fii'e  and  police  de- 
partments of  that  city  who  may  be  disabled  while  in  the  line  of 
their  duty. 

Virginia. 

Firemen's  Relief  Fund.  —  Chapter  181,  Acts  of  1908,  jorovides 
that  in  cities,  towns  and  counties  having  regular  organized  fire 
departments,  every  fire  and  lightning  insurance  company  shall  pay 
to  the  treasurer  of  the  State  $1  out  of  every  $100  of  premiums 
received,  upon  the  amount  of  all  premiums  written  on  policies  cov- 
ering property  within  the  limits  of  such  cities,  towns  and  counties, 
the  amounts  so  paid  to  constitute  a  fund  for  the  benefit  of  the 
Firemen's  Relief  Association.  This  fund  shall  be  administered  for 
the  relief  of  injured  and  disal)led  members  of  any  fire  deijartment 
in  the  city,  town  or  county,  for  the  relief  of  those  actually  de- 
pendent on  the  service  of  any  fireman  who  has  lost  his  life  in  the 
fire  service,  and  for  the  payment  of  necessary  funeral  expenses  of 
any  such  fireman. 

Wisconsin. 

Firemen's  Pension  Fund:  Cities  of  the  First  Class.  —  Chapter 
165,  Laws  of  1903,  and  chapter  87,  Laws  of  1907,  provide  for  the 
■establishment  and  administration  of  such  fund.  The  fund  is  main- 
tained by  two-thirds  of  the  sum  of  the  tax  on  fire  insurance  com- 
panies or  agents;  by  a  levy  of  2^2  per  cent,  on  monthly  salaries 
of  firemen ;  by  accumulation  of  all  fees,  gifts  and  so  on,  to  the 
amount  of  $200,000,  such  sum  to  be  a  permanent  fund,  the  in- 
terest on  it  to  be  used  for  expenses.  The  fund  is  administered  by 
the  city  treasurer,  mayor,  city  comptroller,  chief  engineers  and 
three  members  of  the  fire  department,  to  be  elected.  Pensions  are 
granted  after  ten  years  of  service,  upon  retirement  or  discharge  due 
to  injuries  from  any  cause.  The  amount  of  the  pension  is  not  more 
than  one-half  of  the  monthly  salary.  Motherless  orphans  or  de- 
pendent daughters  of  retired  or  deceased  firemen  receive  a  certain 
amount,  to  be  determined  by  the  position  and  the  salary  of  the  de- 
ceased firemen.  Widows'  allowances  are  also  granted  from  this  fund. 
No  family  may  receive  more  than  one-half  of  the  amount  of  the 
monthly  salary  of  the  deceased.  No  allowance  is  to  be  paid  to 
the  widow  or  daughter  after  the  death  of  a  fireman  discharged 
after  twenty-two  years  of  service,  or  to  a  minor  child  over  18  years 
of  age. 

Cities  of  the  Second,  Third  and  Fourth  Classes.  —  Chapter  214, 
Acts  of  1907,  provides  for  a  firemen's  pension  fund  for  cities  of 


1910.]  HOUSE  — No.  1400.  135 

these  classes.     The  fund  is  made  up  of  half  of  all  sums  collected 
in    the   city    for   the    disposition    of   fire   insurance    companies;    all 
moneys  deducted  from  firemen's  pay  for  fines  and  time  losses;  con- 
tributions from  the  firemen,  amounting  to  1  per  cent,  of  the  monthly 
salaries;  rewards  and  gifts  of  property;  to  be  used  as  a  permanent 
fund,  until  the  total  amounts  to  $50,000.     The  pensions  are  gi-anted 
to  disabled  firemen  discharged  for  injuries  received  in  the  service, 
and    to    firemen    retired    after   twenty-two    yeare    of    service.      The 
amount  of  the  pension  is  one-half  the  pay.     Widows  receive  one- 
third  of  the  salary  of  the  husband  at  time  of  death;  children,  $6 
monthly  for  each  child  until  16  years  of  age;  a  dependent  father  or 
mother  receives  the  same  as  a  widow.     The  total  sum  paid  to  any 
family  may  not  exceed  one-half  the  monthly  salary  of  the  deceased. 
Policemen's  Pension  Fund:  Cities  of  the  First  Class.  —  Chapter 
397,  Laws  of  1903,  chapter  286,  Laws  of  1903,  chapter  60,  Laws 
of  1907,  contain   the  provisions  relating  to  this   fund.     The  fund 
is  created  from  1  per  cent,  of  license  revenues,  except  dog  licenses; 
rewards  and  fines  of  members;  one-half  of  the  money  received  from 
dog  licenses;  and  21/2  per  cent,  of  the  monthly  salary  of  policemen. 
Provision  is  made  for  a  permanent  fund,  to  be  accumulated  until 
it  reaches  the  sum  of  $300,000.     Disabled  members  are  retired  on 
half-pay  when  injured  on  duty.     Pensions  are  granted  on  discharge 
after  twenty-two  years  of  service.     Any  member  of  the  depaiiment 
who    has   served   twenty-two    years   may   apply    for   retirement    on 
pension.     The  amount  of  the  pension  in  each  ease  is  one-half  the 
salary.     Pensions    to   widows   vary   according   to   the   position    and 
salan'  of  the  deceased.     Pensions  to  minor  children  amount  to  $6 
a  month.     The  total  pension  to  the  whole  family  is  not  to  exceed  one- 
half  the  amount  of  the  monthly  salary  of  the  deceased. 

Cities  of  the  Second  and  Third  Classes.  —  Chapter  670,  Laws 
of  1907,  provides  for  policemen's  pension  fund  for  these  classes 
of  cities.  The  sources  of  the  fund  are  all  money  received  from 
dog  licenses  and  one-half  the  money  received  from  other  licenses; 
I  all  money  received  for  rewards;  salaiy  losses  on  account  of  sick- 
ness; and  1  per  cent,  of  the  monthly  salary  of  each  member.  Also, 
a  permanent  fund  is  to  be  accumulated,  to  amount  to  $50,000. 
Disabled  ])olicemen  are  retired  on  half  pay.  A  period  of  twenty-two 
years'  service  entitles  to  pension  u]ion  application,  at  the  same  rate. 
Widows'  ]iensions  amount  to  one-third  of  the  monthly  pay  of  the 
deceased ;  children's  allowances  to  $6  each  per  month.  The  total  sum 
to  be  given  to  any  family  is  limited  to  one-half  the  monthly  salary 
of  the  deceased. 


136  OLD   AGE   PENSIONS.  [Jan. 


4.  Pension  Systems  of  American  Railroad  and  Indus- 
trial Corporations. 

While  European  governments  have  been  instituting  public 
pension  and  insurance  schemes,  American  railroad  and  in- 
dustrial corporations  have  been  establishing  retirement  sys- 
tems independently  of  State  aid.  The  pioneer  in  this  move- 
ment was  the  Baltimore  &  Ohio  Railroad,  which  established 
a  pension  system  in  1884.  The  movement  did  not,  however, 
begin  to  spread  until  the  last  decade.  Since  1898  there  has 
been  a  rapid  extension  of  private  pension  and  insurance  sys- 
tems. Besides  railroad  and  industrial  corporations,  many 
street  railway  companies,  mercantile  houses  and  banks  have 
established  such  systems.  This  commission  has  obtained  in- 
formation concerning  50  of  these  schemes,  28  of  which  are 
maintained  by  railroad  companies,  and  22  by  industrial,  com- 
mercial or  banlving  establishments.^  Numerous  other  con- 
cerns which  have  no  pension  system  make  a  practice  of 
retiring  aged  employees  by  special  arrangement  in  individual 
cases. 

The  railroad  companies  known  to  have  established  pension 
schemes  are :  the  Atlantic  Coast  Line,  the  Baltimore  &  Ohio, 
the  Bessemer  &  Lake  Erie,  the  Buifalo,  Rochester  &  Pitts- 
burg, the  Chicago  &  Northwestern,  the  Chicago,  St.  Paul, 
Minneapolis  &  Omaha,  the  Delaware,  Lackawanna  &,  West- 
ern, the  Houston  &  Texas  Central,  the  Illinois  Central,  the 
Oregon  Railroad  and  Navigation  Company,  the  Oregon  Short 
Line,  the  Pennsylvania,  the  Philadelphia  &  Reading,  the 
Rock  Island,  the  San  Antonio  &  Aransas  Pass,  the  Southern 
Pacific,  the  Texas  &  New  Orleans  Railroad  Company,  the 
Union  Pacific  and  the  New  York  Central  Lines,  including 
the  following  constituent  companies:  the  Chicago,  Indiana 
&  Southern,  the  Cleveland,  Cincinnati,  Chicago  &  St.  Louis, 
the  Lake  Erie  Alliance  &  Wheeling,  the  Lake  Erie  &  West- 
ern, the  Lake  Shore  &  Michigan  Southern,  the  Michigan  Cen- 
tral, the  New  York  Central  &  Hudson  River,  the  New  York 


1  The  total  of  2S  railroad  companies  having-  pension  systems  includes  the  10  constitu- 
ent companies  of  New  York  Central  Lines,  for  which  the  same  pension  system  went  into 
effect  January  1,  1910. 


1910.]  HOUSE  — No.  1400.  137 

i  &  Ottawa,  the  Pittsburgh  &  Lake  Erie  and  the  Eutland  Kail- 
road  Company.  Several  other  railroad  companies  have  a 
pension  scheme  under  consideration,  with  a  view  to  its  intro- 
duction in  the  near  future. 

I      Industrial    and   other   corporations   that  have   introduced 
pension  systems,  concerning  which  the  commission  has  been 
able  to  obtain  information,  are  the  American  Steel  and  Wire 
Company;  Butler  Brothers,  Chicago,  111.;  Deere  &  Co.,  Mo- 
:  line,   111. ;    Calumet  &   Hecla   Mining   Company,    Calumet, 
Mich. ;  Cleveland  Cliffs  Iron  Company,  Ishpeming,  Mich. ; 
; Denver  City  Tramway  Company;  the  Du  Pont  de  Nemours 
1  Powder   Company,    Wilmington,   Del. ;    the   First   National 
:  Bank,  Chicago,  111. ;  Gorham  Manufacturing  Company,  Prov- 
idence, E.  I. ;  Hibbard.  Spencer,  Bartlett  &  Co.,  Chicago, 
\  111. ;   the  International  Harvester   Company ;   the  Interbor- 
■  ough  Street  Eailway  Company,  New  York,  N.  Y. ;  Morris 
&  Co.,   Chicago,  111. ;   the   Old  Dominion   Steamship   Com- 
]^any;  the  Pittsburg  Coal  Company;  the  Standard  Oil  Com- 
,  puny ;  Trenton  Iron  Company,  Trenton,  N.  J. ;  United  Trac- 
!  tion  and  Electric  Company,  Providence,  E.  I. ;  Washington 
Eailway    and    Electric    Company ;    Wells,    Fargo    &    Co. ; 
'  Western  Electric  Company,  Chicago,  111. ;  Westinghouse  Air 
Brake  Company,   Pittsburgh,   Pa.     This  list  of  pensioning 
companies  is  not  to  be  regarded  as  complete ;  it  includes  only 
firms  from  which  the  commission  has  received   an   official 
statement  concerning  the  pension  plan  in  operation. 

The  problem  of  dealing  with  the  aged  employee  is  an  ur- 
gent one  in  the  modern  business  world.  The  use  of  ma- 
chinery and  the  stress  of  industrial  employment  have  made 
it  increasingly  difficult  for  aged  employees  to  hold  tlie  pace. 
The  universal  demand  nowadays  is  for  young  men,  ]\Iany 
concerns  refuse  to  take  on  inexperienced  men  over  35  years 
of  age.  Moreover,  men  wear  out  faster  under  the  increased 
strain.  What  to  do  with  the  worn-out  workers,  —  that  is 
the  essence  of  the  pension  problem.  To  carry  them  on  the 
pay  roll  at  their  regular  employment  means  waste  and  dis- 
organization of  the  working  force;  to  turn  them  adrift  is  not 
humane.     In  the  past,  large  employers  of  labor  have  tried 


138  OLD   AGE   PENSIONS.  [Jan. 

to  meet  this  difficulty  in  piecemeal  fashion  by  retiring  aged 
emj^loyees  on  pension  in  certain  cases,  or  giving  them  light 
work,  each  case  being  provided  for  separately,  on  its  own 
merits;  now  they  are  beginning  to  deal  with  the  problem  in 
a  systematic  fashion,  by  adopting  a  uniform  method  of  re- 
tirement with  pension. 

The  general  nature  of  the  leading  schemes  is  substantially 
the  same.  Provision  is  made  for  the  voluntary  or  compul- 
sory retirement  of  employees  at  a  certain  age,  with  weekly 
or  monthly  allowance.  The  amount  of  the  allowance  is  de- 
termined by  the  length  of  service  and  the  wages  of  the  em- 
ployee. It  is  usually  calculated  on  a  basis  of  a  percentage  of 
the  average  wages  for  each  year  of  service.  The  expenses  of 
the  pension  system  are  commonly  borne  by  the  employer, 
without  contribution  from  the  employee.  Often  the  pension 
system  is  combined  with  provision  for  sickness  and  accident 
insurance,  organized  on  a  contributory  basis. 

The  motives  that  have  induced  large  corporate  employers 
to  provide  retirement  pensions  are  partly  economic  and  partly 
humanitarian  or  philanthropic.  Economic  motives  play  the 
leading  part.  This  thing  has  been  done  because  it  has  been 
found  to  be  good  business  policy.  The  economic  gain  from 
the  pension  system  is  twofold ;  it  eliminates  the  waste  and 
demoralization  attendant  upon  the  continued  employment  of 
old  men  who  have  outlived  their  usefulness ;  and  it  helps  to 
promote  industry,  contentment  and  loyalty  on  the  part  of  the 
working  force.  The  pension  system  aids  in  solving  the  dif- 
ficult ]~)roblem  of  stimulating  the  employees  of  a  large  cor- 
poration to  the  highest  efficiency.  This  economic  advantage 
of  retirement  pensions  has  been  well  stated  by  Mr.  Burton 
Hendrick,  in  an  article  on  ''  The  Superannuated  Man,"  Mc- 
Clure's  Magazine,  December,  1908,  in  these  Avords:  — 

The  most  effective  way  of  securing-  the  right  kind  of  force  is 
obviously  to  adopt  a  broad  general  policy  that  will  attract  the 
most  ambitious  men,  and  secure  from  them  the  most  efficient  work 
of  their  productive  years.  The  laws  of  gravitation  affect  wage 
earners  as  well  as  other  objects  in  nature;  the  best  men  inevitably 
gi'avitate  toward  the  most  satisfactory  terms  of  employment.  And 
terms  of  employment  mean  other  things  than  wages  and  hours  of 


1910.]  HOUSE  — No.  1400.  139 

labor;  .  .  .  The  corporation  that  can  insure  its  employees  a  rea- 
sonable permanency  of  employment,  promotion  in  order  of  pre- 
cedence and  fitness,  and  a  satisfactory  provision  for  old  age,  will 
inevitably  attract  the  highest  grade  of  men  and  obtain  from  them 
the  most  ethcient  work. 

The  provisions  of  the  leading  pension  schemes  concerning 
which  information  has  been  obtained  by  the  commission  may 
be  analyzed  briefly  as  follows :  — 

Age  of  Retirement.  —  Most  pensioning  concerns  fix  one 
age  for  compulsory  retirement  and  another  for  yoluntary  re- 
tirement, the  latter  including  retirement  at  the  request  of  the 
employee  or  at  the  discretion  of  the  employer.  Some  com- 
panies permit  also  retirement  by  request  or  order  at  a  still 
earlier  age  in  case  of  invalidity  or  incapacity.  The  usual 
age  of  compulsory  retirement  is  70  years ;  of  voluntary  re- 
tirement, 60  years.  In  several  cases  compulsory  retirement 
is  enforced  at  the  age  of  65 ;  in  other  cases  voluntary  retire- 
ment is  not  permitted  before  65,  in  one  case  not  before  TO. 
One  corporation  fixes  the  age  of  voluntary  retirement  at  62 ; 
three  at  55.  In  one  pension  scheme  no  age  of  retirement  is 
specified,  each  case  being  dealt  with  by  itself.  In  numerous 
instances  provision  is  made  for  retiring  employees  on  account 
of  incapacity  at  an  earlier  age  than  that  fixed  for  regular 
retirement. 

Period  of  Service  required.  —  A  certain  minimum  period 
of  employment  in  the  pensioning  establishment  is  required 
in  all  cases  as  a  condition  of  retirement  on  pension.  The 
prescribed  term  varies  from  ten  to  thirty  years.  The  latter 
minimum  is  required  in  only  one  case.  Of  the  terms  of 
twenty-five,  twenty,  fifteen,  and  ten  years,  the  term  twenty  is 
taken  in  the  largest  number  of  cases. 

Amount  of  Pension  granted.  —  The  amount  of  the  pension 
is  determined  in  various  ways,  on  the  general  principle  of 
allowing  a  certain  percentage  of  the  average  wages  for  each 
year  of  employment.  The  usual  ai  rangcment  is  an  allow- 
ance for  each  year  of  service  equal  to  1  per  cent,  of  the  aver- 
age wages  earned  during  the  last  ten  years ;  in  one  case  the 
period  is  five  years  instead  of  ten.  For  exami)]e,  an  em- 
ployee who  has  served  forty  years,  at  an  average  Avage  of  $50  a 


140  OLD   AGE   PENSIONS.  [Jan. 

month  during  the  last  ten  years,  would  receive  a  monthly 
pension  amounting  to  forty  times  1  per  cent,  of  that  sum,  or 
$20.     In  one  case  the  percentage  of  wages  allowed  is  gradu- 
ated from  1  to  2  per  cent.,  according  to  the  length  of  service. 
Another  scheme  provides  for  a  monthly  allowance  equal  to 
1^/2  pel'  cent,  for  each  year  of  service  on  the  first  $100,  or 
any  part  thereof,  of  the  highest  average  monthly  pay  of  the 
employee  during  any  year  of  his  last  ten  consecutive  years 
of  service ;  and,  in  addition  to  this,  an  amount  equal  to  i/o  of 
1  per  cent,  of  any  excess  over  $100  of  the  average  monthly 
pay  for  the  ten-year  period.       Another  allows  2  per  cent,  of 
the  salary  at  the  date  of  retirement  for  each  year  of  service, 
with  a  maximum  limit  of  $5,000.       Another  company  pays 
pensions   proportionate   to   the    amounts   of   the    employee's 
previous  contributions  to  the  compulsory  relief  fund  for  sick- 
ness and  accident  insurance.     Still  another  corporation  grants 
pensions  at  the  rate  of  25  per  cent,  of  the  average  pay  of  the 
employee  for  the  ten  years  preceding  retirement,  and  also 
permits  the  voluntary  retirement  of  employees  between  the 
ages  of  60  and  64,  who  have  served  the  company  twenty  years, 
on  pensions  equal  to  50  per  cent,  of  the  average  pay  for  the 
preceding  ten  years,  this  higher  rate  to  continue  to  the  time 
the  pensioner  is  65  years  of  age,  and  the  rate  thereafter  to  be 
25  per  cent.       Other  methods  of  reckoning  the  amount  of 
the  pension  are  the  following :  1  per  cent,  of  the  total  amount 
paid  to  the  employee  in  wages  during  his  entire  period  of 
service;   20  to  40  per  cent,   of  the  average  annual  wages, 
according  to  length  of  employment;  one-half  of  the  average 
wages  for  the  last  five  years  of  employment ;  one-fiftieth  of 
the  salary  for  each  year  of  service,  up  to  a  maximum  limit 
of  thirty-five-fiftieths  of  the  salary;  a  flat  sum  of  $10,  $15  or 
$25  per  month,  according  to  the  wages  previously  received. 
A  maximum  pension  limit  of  $100  per  month  is  fixed  in  one 
scheme,   and   $75   in  another.     Minimum  limits   of   $18   a 
month  and  lower  are  found  in  some  cases. 

Provision  of  Pension  Funds.  —  The  expenses  of  the 
pension  system  are  in  a  great  majority  of  cases  borne  entirely 
by  the  employer,  no  contribution  by  employees  being  re- 
quired.      The  pensions  are  paid  from  a  fund  established  by 


1910.]  HOUSE  — No.  1400.  141 

the  company,  or  from  an  annual  appropriation,  or  by  both 
methods.  Some  companies,  however,  require  contributory 
pajonent  by  the  employees.  One  system,  for  example,  pro- 
vides for  a  contribution  by  the  employee  to  the  amount  of  3 
per  cent,  of  his  wages ;  another  to  the  amount  of  2  per  cent,  of 
his  wages ;  and  the  payment  in  each  case  of  an  equal  amount 
by  the  company.  Another  fixes  the  employee's  contribution 
at  3  cents  per  month,  supplemented  by  an  equal  amount  from 
the  company. 

Other  Details.  —  The  pension  system  is  administered  by 
boards  composed  of  employers  and  employees,  appointed 
usually  by  the  directors.  In  some  cases  the  total  annual  ex- 
penditure  for  pensions  is  limited  to  a  fixed  sum.  In  com- 
puting the  time  of  service,  reduction  is  made  for  all  time  out 
of  employment ;  only  actual  time  of  service  is  reckoned.  Em- 
ployees in  receipt  of  pensions  are  usually  permitted  to  engage 
in  outside  employment  without  forfeiting  their  pension 
privileges. 

The  pension  system  of  the  Baltimore  and  Ohio  is  the  oldest 
in  existence.  It  is  operated  in  connection  with  a  relief  de- 
partment, established  j\Iay  1,  1880,  which  provides  accident, 
sickness  and  death  benefits  from  funds  maintained  by  joint 
contributions  of  employees  and  company.  The  pension  fea- 
ture was  added  October  1,  1884.  The  total  number  of  pen- 
sioners from  October  1,  1884,  to  June  30,  1908,  was  1,134, 
of  whom  511  were  still  on  the  list  at  the  later  date.  The 
amount  paid  for  pensions  in  1908  was  $112,356.45,  and  the 
total  amount  paid  since  the  establishment  of  the  system  was 
$1,120,381.59.  The  provisions  of  the  pension  feature,  as 
given  in  the  published  "  Regulations  governing  the  Relief  De- 
partment of  the  Baltimore  and  Ohio  Railroad  Company,"  are 
the  following :  — 

Pension  Feature,  Baltimore  &  Ohio  Railroad  Company. 

The  fund  for  the  payment  of  pensions  will  be  derived  wholly 
from  the  contributions  of  the  company.  The  company's  contribu- 
tions will  be  applied  to  the  purposes  which  are  herein  stated,  in 
the  order  of  their  precedence :  — 

FxrsX.  —  To  provide  means  of  support  during  life  for  those  per- 


142 


OLD   AGE   PENSIONS. 


[Jan. 


sons,  members  of  the  relief  feature  of  the  Baltimore  &  Ohio  Em- 
ploj'ees'  Relief  Association  for  four  consecutive  years,  who,  having 
served  the  company  for  ten  consecutive  years,  and  having  reached 
the  age  of  65,  shall  be  honorably  relieved  from  duty. 

Second.  —  To  provide  in  the  same  manner  for  like  persons  who 
elect  to  retire  from  the  service. 

Third.  —  If  at  any  time  the  funds  applicable  to  the  purposes 
of  this  feature  shall,  in  the  opinion  of  the  committee,  be  more 
than  sufficient  to  provide  for  the  persons  mentioned  above,  such 
surplus  shall  be  applied  to  aid  or  support  such  class  or  classes 
of  the  company's  employees,  members  of  the  relief  feature,  as  the 
committee  may  think  most  deserving  and  most  in  need  of  help, 
under  such  supplemental  regulations  as  the  committee  may  then 
adopt. 

No  member  shall  be  entitled  to  wages  from  the  company  and  to 
a  pension  allowance  at  the  same  time,  or  to  benefits  from  the  relief 
feature  and  a  pension  at  the  same  time. 

Pensions  will  be  paid  monthly.  Each  pensioner  will  receive  a 
daily  allowance,  excluding  Sundays,  equal  to  one-half  the  benefits 
provided  to  be  paid  for  sickness,  under  the  regulations  of  the 
relief  feature,  to  a  member  of  the  class  to  which  the  pensioner 
would,  while  in  the  service,  have  been  assigned  under  said  regula- 
tions, had  he  been  required  to  become  a  full  member  of  said  feature. 
In  the  case  of  a  pensioner  who  has  been  continuously  a  member 
of  the  relief  feature  of  the  Baltimore  &  Ohio  Employees'  Relief 
Association  fifteen  years,  this  allowance  will  be  increased  by  the 
addition  of  5  per  cent,  thereof;  and  a  like  addition  will  be  made 
for  each  additional  term  of  five  consecutive  years  of  such  member- 
ship. 

The  following  table  shows  in  brief  the  amount  of  daily  allowance 
to  pensioners :  — 


Ten  Years 
Membership 
and  under. 

One-half 
Sick  Rate. 

Fifteen 

Years 

Membership, 

5  Per  Cent. 

Additional. 

Twenty 

Years 

Membership, 

10  Per  Cent. 

Additional. 

Those  contributing  under  relief  feature 
class  A,         ....          . 

to 

$0  25 

SO  26i 

SO  27i 

Those  contributing  under  relief  feature 
class  B,        .          .          .          .          . 

to 

50 

62i 

55 

Those  contributing  under  relief  feature 
class  C,         .           ,           .           ,           . 

to 

75 

78f 

82i 

Those  contributing  under  relief  feature 
class  D,        .          .          .          .          . 

to 

1  00 

1  05 

1   10 

Those  contributing  under  relief  feature 
class  E,        .          .          .          .          . 

to 

1   25 

1  31i 

1   37J 

1910.]  HOUSE  — No.  1400.  143 

The  committee  may  at  any  time  make  a  percentage  reduction  of 
all  pensions,  or  further  limit  the  classes  of  persons  who  may  become 
pensioners. 

The  statement  of  a  member's  age  contained  in  his  application  for 
membership  in  the  relief  feature  shall,  for  the  purposes  of  this 
feature,  be  tinal  and  conclusive. 

For  the  purposes  of  this  feature,  members  shall  be  considered 
as  in  the  company's  service  during  the  time  they  receive  benefits 
from  the  relief  feature. 

The  failure  of  any  pensioner  to  claim  his  benefits  for  two  years, 
counted  from  the  last  payment  to  him,  shall  be  presumptive  evi- 
dence that  such  pension  has  terminated  by  reason  of  the  pensioner's 
death;  and  his  name  shall  be  stricken  from  the  list  of  pensioners, 
subject  to  the  right  of  restoration  to  the  same  on  a  new  application 
by  the  pensioner,  and  satisfactory  accounting  to  the  superintendent 
for  his  failure  to  claim  his  pension. 

T'^pon  the  death  of  a  pensioner,  the  accrued  pension  to  the  date  of 
his  death  shall  not  be  considered  a  part  of  the  estate  of  the  deceased, 
nor  liable  to  be  applied  to  the  payments  of  the  debts  of  said  estate 
in  any  case  whatever,  but  shall  inure  to  the  sole  and  exclusive  benefit 
of  his  widow  or  children ;  and  if  no  widow  or  child  survive,  no  pay- 
ment whatever  of  the  accrued  pension  shall  be  made  or  allowed, 
except  so  much  thereof  as  may  be  necessary  to  defray  the  expenses 
of  the  burial  of  the  decedent,  in  case  he  shall  not  leave  sufficient 
assets  to  meet  such  expenses,  and  the  burial  expenses  thus  to  be 
allowed  shall  I)e  in  the  discretion  of  the  superintendent. 

Any  pledge,  mortgage,  sale,  assignment  or  transfer  of  any  right 
or  claim  to  any  pension  granted  under  these  regulations  shall  be  void 
and  of  no  effect;  and  no  one  save  the  pensioner  himself,  or,  in  the 
event  of  his  death,  his  widow  or  children,  shall  be  entitled  to  receive 
such  pension;  but  the  payment  to  persons  laboring  under  legal  disa- 
bilities may  be  made  to  such  persons  as  the  committee  may  think 
proper. 

No  sum  of  money  due  or  to  become  due  to  any  pensioner  under  this 
feature  shall  be  liable  to  attachment,  levy  or  seizure  by  or  under  any 
legal  or  eijuitable  i)rocess  whatever,  whether  the  same  remains  with 
the  relief  department  or  any  agent  thereof,  or  is  in  the  course  of 
transmission  to  the  pensioner  entitled  thereto,  but  shall  iiuire  wholly 
to  the  benefit  of  such  pensioner.  Should  any  creditor  of  the  pensioner 
endeavor  to  collect  the  pension  by  process  of  attachment,  or  by  any 
other  legal  or  equitable  process  laid  in  the  hands  or  served  upon 
the  company  or  the  relief  dei)artment  for  the  purpose  of  paying  the 
debt  due  by  the  pensioner  to  such  creditor,  or  any  part  thereof,  all 
the  money  due  or  yet  to  become  due  by  the  department  to  such  pen- 
sioner shall  be  forfeited  to  the  department,  and  shall  belong  to  it 
absolutely,  to  be  dealt  with  as  the  committee  shall  deem  i)roper. 


144  OLD   AGE   PENSIONS.  [Jan. 

These  regulations  shall  in  no  way  affect  any  pension  heretofore 
granted  to  any  person  admitted  to  the  pension  feature  of  the  Balti- 
more &  Ohio  Emploj'ees'  Relief  Association. 

The  pension  plan  of  the  International  Harvester  Com- 
pany was  organized  September  1,  1908.  This  plan  was  for- 
mulated by  a  committee  of  the  company,  after  a  thorough 
study  of  the  leading  pension  schemes  already  in  existence. 
As  a  product  of  recent  and  thorough  investigation  in  this 
field,  the  plan  is  here  presented,  as  set  forth  in  the  pamphlet, 
"  Benefit  and  Pension  Plans  for  the  Employees,"  issued  by 
the  International  Harvester  Company :  — 

Pension  Plan  of  the  International  Harvester  Company. 

The  board  of  directors,  after  careful  consideration  of  the  sub- 
ject and  an  examination  of  the  various  pension  systems  now  in 
operation,  have  approved  the  following  plan  as  the  best  and  most 
liberal  for  employees  who  by  long  and  faithful  service  have  earned 
an  honorable  retirement. 

The  directors  establish  this  pension  fund  as  an  evidence  of  their 
appreciation  of  the  fidelity,  efficiency  and  loyalty  of  the  employees. 

In  the  administration  of  this  pension  system  are  associated  In- 
ternational Harvester  Company,  International  Harvester  Company 
of  America,  and  subsidiary  companies. 

Pension  Board. 

1.  Administration.  —  The  administration  of  the  pension  fund 
shall  be  in  charge  of  a  pension  board,  consisting  of  five  members, 
who  shall  all  be  officers  or  employees  of  this  company  or  of  affili- 
ated or  sul)si diary  companies,  and  shall  be  appointed  annually  by 
the  board  of  directors  of  this  company,  to  serve  for  one  year  and 
until  iheir  successors  are  appointed  and  shall  qualify. 

2.  Officers.  —  The  pension  board  shall  elect  a  chairman  and  a 
secretary  from  among  its  members,  and  the  treasurer  of  this  com- 
pany shall  be  ex-officio  treasurer  of  the  fund.  The  board  may  make 
and  enforce  rules  for  the  efficient  administration  of  the  pension 
fund,  subject  to  the  approval  of  the  board  of  directors.  The 
pension  board  shall  control  the  payment  of  pension  allowances  under 
the  rules  hereinafter  stated. 

3.  Quorum.  —  A  majority  of  the  pension  board  shall  constitute 
a  quorum  for  all  purposes. 

4.  Representation.  —  The  members  of  the  board  shall  be  so  chosen 
that  the  principal  departments  of  the  business  shall  have  repre- 
sentation. 


1910.]  HOUSE  — No.  1400.  145 


Pension  Fund. 

5.  The  treasurer  of  the  company  shall  be  the  custodian  and 
treasurer  of  the  fund,  and  additions  shall  be  made  to  said  fund 
yearly  or  from  time  to  time,  according  to  the  aggregate  pension 
allowances  and  the  amount  available  in  the  pension  fund  for  pay- 
ment of  the  same.  Should  the  aggregate  pension  allowance  exceed 
$100,000  in  any  one  year,  then,  unless  the  board  of  directors  in- 
creases the  yearly  amount  usable  for  pensions,  a  new  rate  shall  be 
established,  proportionately  reducing  all  allowances. 

Paj^ments  from  this  fund  shall  only  be  made  in  accordance  with 
and  by  direction  of  the  pension  board. 

Eligibility. 

6.  The  pension  board  -may  authorize  the  payment  of  a  pension 
to  any  retired  employee,  on  the  following  basis :  — 

(a)  All  employees  of  this  company  and  of  subsidiary  and  affili- 
ated companies,  engaged  in  any  capacity,  are  eligible  to  pensions 
as  hereinafter  stated. 

(b)  All  male  employees  who  shall  have  reached  the  age  of  65 
years,  and  have  been  twenty  or  more  years  in  the  service,  may, 
at  their  own  request,  or  at  the  discretion  of  the  pension  board,  be 
retired  from  active  service  and  become  eligible  to  a  pension. 

(c)  All  male  employees  who  have  been  twenty  or  more  years  in 
the  service  shall  be  retired  at  the  age  of  70  years  on  the  first  day 
of  the  calendar  month  following  that  in  which  they  shall  have 
attained  said  age.  unless  at  the  discretion  of  the  pension  board 
some  later  date  be  fixed  for  such  retirement.  Persons  occupying 
executive  positions  are  exempt  from  maximum  age  limit. 

(d)  All  female  employees  who  shall  have  reached  the  age  of 
50  years,  and  have  been  twenty  or  more  years  in  the  service,  may, 
at  their  own  request,  or  at  the  discretion  of  the  pension  board,  be 
retired  from  active  service  and  become  eligible  to  a  pension. 

(e)  All  female  employees  shall  be  retired  at  the  age  of  60  years, 
on  the  first  day  of  the  calendar  month  following  that  in  which  they 
shall  have  attained  said  age,  unless  at  the  discretion  of  the  pension 
board  a  later  date  be  fixed  for  such  retirement.  Persons  occupy- 
ing executive  positions  are  exempt  from  maximum  age  limit. 

Definitions. 

7.  The  terms  "  service  "  and  "  in  the  service  "  apply  to  all  em- 
ployees of  the  International  Harvester  Company,  or"  of  any  affiliated 
or  subsidiary  companies  which  are  now  or  may  hereafter  be  owned 
or  controlled  by  it,  and  of  the  International  Harvester  Company  of 
America,  who  have  received  a  stated  and  regular  compensation  from 


146  OLD   AGE   PENSIONS.  [Jan. 

any  of  said  companies.  The  term  of  service  shall  be  reckoned  from 
the  date  of  commencing  with  the  original  company  whose  property 
and  business  shall  have  become  those  of  the  International  Harvester 
Company,  or  any  subsidiary  companies,  or  of  the  International  Har- 
vester Company  of  America. 

Temporary  Absence. 

8.  A  temporary  lay-off  on  account  of  illness  or  of  reduction  of 
force  is  not  to  be  considered  as  a  break  in  the  continuity  of  service; 
but  when  such  absence  exceeds  six  consecutive  months,  it  shall  be 
deducted  in  computing  the  length  of  active  service. 

Leaving  Service. 

9.  If  a  person,  after  leaving  the  service  for  more  than  two  years, 
shall  be  re-employed,  he  shall  be  considered  in  his  relation  to  the 
pension  system  as  a  new  employee. 

Pension  Allowances  and  Conditions. 

10.  Amount.  —  The  sums  which  the  board  of  pensions  may  author- 
ize to  be  paid  monthly  to  employees  retired  at  the  age  limit  shall  be 
as  follows :  for  each  year  of  active  service,  an  allowance  of  1  yiex 
cent,  of  the  average  annual  jiay  during  the  ten  years  next  preceding 
retirement;  but  no  pension  shall  exceed  $100  per  month,  or  be  less 
than  $18  per  month. 

11.  Payment. —  («)  Pension  allowances  shall  be  paid  on  the  first 
of  each  month  from  the  date  of  retirement  until  the  death  of  em- 
ployee. 

{h)  At  the  discretion  of  the  pension  board,  these  allowances  may 
be  continued  to  widows  and  orphans  of  a  pensioner  for  a  limited 
period. 

(e)  Pension  allowances  shall  be  non-assignable,  and  an  attempted 
transfer  or  jdedge  of  the  same  shall  not  be  recognized  by  the  pension 
board,  and  may,  in  its  discretion,  work  a  forfeiture  thereof. 

{d)  Pension  allowances  may  be  suspended  or  terminated  by  the 
pension  board  in  cases  of  gross  misconduct  or  of  any  violation  of 
the  rules,  or,  at  its  discretion,  may  be  paid  to  some  member  of  the 
family. 

(e)  The  acceptance  of  the  jiension  shall  not  debar  any  retired 
employee  from  engaging  in  any  other  business  which  in  the  judg- 
ment of  the  pension  board  is  not  prejudicial  to  the  interests  of  this 
company  or  of  any  affiliated  or  subsidiary  company,  but  he  cannot 
re-enter  service. 

(/)  No  payments  for  pensions  shall  be  approved  by  the  pension 
board  until  payment  from  any  relief  fund  oi^erated  by  this  company, 
or  any  attUiated  or  subsidiary  comj^any,  shall  cease. 


1910.]  HOUSE  — No.  1400.  147 


Pension,  —  how  computed. 

12.  The  amount  of  pensions  granted  on  account  of  advanced  age 
will  depend,  as  before  stated,  on  two  conditions :  the  number  of  years 
the  person  has  served  the  company,  and  the  amount  of  his  average 
wages  per  year  for  the  ten  years  next  preceding  retirement.  Thus, 
for  illustration,  if  the  average  pay  per  year  for  the  last  ten  years  of 
active  sendee  equals  $600,  and  if  the  service  has  been  continuous 
for  twenty-five  years,  the  pension  would  be  25  per  cent,  of  $600, 
or  $150  per  year,  or  $12.50  per  month.  Since  the  minimum  pension 
has  been  fixed  at  $18  per  month,  then  to  this  regular  percentage  $5.50 
would  be  added,  making  the  minimum  sum  of  $18. 

In  special  cases,  where  the  term  of  sei-vice  is  less  than  twenty  years, 
the  pension  and  the  amount  of  same,  if  any,  will  be  determined  solely 
at  the  discretion  of  the  board  of  pensions. 

Department  heads  are  expected  to  keep  informed  of  the  where- 
abouts and  physical  condition  of  former  employees  receiving  pensions, 
and  are  required  to  advise  the  secretary  of  the  board  of  pensions  of 
the  death  of  the  pensioner,  and  of  any  other  circumstances  which 
would  affect  his  monthly  payment. 

A  physical  examination  by  a  company  surgeon,  or,  in  ease  of 
female  employees,  by  a  surgeon  approved  by  the  board  of  pensions, 
will  be  required  of  employees  who  wish  to  be  retired  on  a  pension 
allowance  because  of  incapacity. 

How  to  secure  a  Pension. 

13.  An  employee  wishing  to  apply  for  a  pension  should  first  take 
up  the  subject  with  the  superintendent  at  the  works  where  he  is  em- 
ployed, or  the  head  of  the  department  in  which  he  is  serving,  or  with 
a  member  of  the  pension  board.  A  form  will  then  be  furnished, 
which  must  be  filled  out  and  signed,  giving  the  necessarj'  information 
concerning  the  applicant's  age,  length  of  service  and  w-ages.  This 
formal  application  must  be  signed  by  the  works  superintendent  or 
head  of  department  employing  applicant,  and  then  sent  to  the  secre- 
tary of  the  pension  board  at  his  office. 

Xo  Contractual  Rights  conferred. 

14.  Neither  the  establishment  of  this  system  nor  the  granting  of  a 
pension,  nor  any  other  action  now  or  hereafter  taken  by  the  pension 
board  or  by  the  offcers  of  this  company,  shall  be  held  or  construed 
as  creating  a  contract,  or  giving  to  any  officer,  agent  or  employee  a 
right  to  be  retained  in  the  seniee,  or  any  right  to  any  pension  allow- 
ance; and  the  company  expressly  reserves,  unaffected  hereby,  its 
right  to  discharge  without  liability,  other  than  for  salary  or  wages 


148  OLD   AGE   PENSIONS.  [Jan. 

due  and  unpaid,  any  employee,  whenever  the  interests  of  the  com- 
pany may  in  its  judgment  so  require. 

The  latest  railroad  pension  plan  is  tliat  of  the  New  York 
Central  Lines,  which  was  adopted  November  10,  1909,  to  go 
into  effect  January  1,  1910.  The  rules  governing  the  opera- 
tives of  the  system  are  as  follows :  — 

Pension  Department  of  the  New  York  Central  Lines. 

Rule  No.  1.  —  The  administration  of  the  pension  department  shall 
be  in  charge  of  a  committee,  to  be  known  as  the  "  Board  of  Pen- 
sions," consisting  of  eight  persons  to  be  appointed  annually  by  the 
president  of  the  company. 

The  board  of  pensions  shall  elect  a  chairman  from  among  its 
members,  shall  appoint  a  secretary,  and  shall  have  power,  subject 
to  the  approval  of  the  i^resident  and  board  of  directors,  to  adopt 
such  rules  for  the  government  of  the  pension  department  as  it  may 
deem  advisable. 

It  shall  also  have  power  to  determine  the  eligibility  of  employees 
to  receive  pension  allowances,  and  to  authorize  the  payment  of  pen- 
sions as  provided  in  the  rules. 

Rule  No.  2. —  (a)  All  employees  of  this  company  who  attain,  or 
who  shall  have  attained,  the  age  of  70  years,  shall  be  retired.  Such 
of  them  as  shall  have  been  continviously  in  the  service  for  at  least 
ten  years  immediately  preceding  their  retirement  shall  be  j^ensioned. 

(&)  Any  employee  who  has  been  at  least  twenty  years  in  con- 
tinuov;s  service,  and  who,  in  the  opinion  of  the  board  of  pensions, 
has  become  unfitted  for  duty,  may  be  retired  and  pensioned.  Any 
such  employee  may  make  application  or  be  recommended  by  his 
employing  officer  for  retirement. 

Examination  by  physicians  appointed  for  that  purpose  will  be 
required  of  all  employees  less  than  70  years  of  age  who  apply,  or 
who  are  recommended  for  retirement,  before  the  attainment  of  that 
age. 

Retirements  shall  be  effective:  {a)  in  the  case  of  employees  at- 
taining the  age  of  70  years,  on  the  first  day  of  the  calendar  month 
following  the  attainment  of  that  age;  (5)  in  other  cases,  on  the 
first  day  of  the  calendar  month  following  the  approval  for  retire- 
ment by  the  board  of  pensions. 

Rule  No.  3.  —  Pension  allowances  authorized  are  to  be  computed 
upon  the  following  basis:  for  each  year  of  continuous  service,  1 
per  cent,  of  the  average  monthly  pay  received  for  the  ten  years 
next  preceding  retirement. 

The  board  of  directors  of  this  company  reserves  the  right  to  estab- 


1910.]  HOUSE  — No.  1400.  149 

lish  a  new  and  lower  basis  of  pension  allowances  if  at  any  time 
it  shall  be  found  that  the  basis  adopted  will  create  demands  in  ex- 
cess of  the  sum  of  $225,000  per  annum,  which  sum  has  been  fixed 
by  the  board  of  directors  as  the  maximum  amount  to  be  expended 
for  pension  allowances  in  any  one  year.  Notice  of  such  new  basis 
will  be  given  before  the  first  of  the  calendar  year  during  which 
it  may  be  decided  to  put  the  same  into  effect. 

Rule  No.  4.  —  Pension  allowances,  when  authorized  pursuant  to 
these  regulations,  shall  be  paid  monthly,  during  the  life  of  the  bene- 
ficiary; provided,  however,  that  in  case  of  gross  misconduct  allow- 
ances maj'  be  withheld  or  discontinued,  at  the  option  of  the  board 
of  pensions. 

Bule  No.  5.  —  The  terms  "service"  and  "in  the  service"  refer 
to  exclusive  employment  on  or  in  connection  with  the  railroads 
owned,  leased  or  operated  by  this  company  at  the  time  of  the  adop- 
tion of  these  rules. 

EmplojTuent  on  any  of  these  railroads,  whether  prior  or  subse- 
quent to  their  control  by  this  company,  shall  be  included  in  deter- 
mining the  length  of  sen-ice  of  an  emploj^ee. 

Employment  on  any  of  the  so-called  "  New  York  Central  Lines," 
or  the  railroads  owned,  leased  or  operated  by  them  at  the  time  of  the 
adoption  of  these  rules,  which  have  adopted  or  shall  ado^Dt  a  like 
pension  plan  to  that  herein  set  forth,  shall  be  included  in  determining 
the  length  of  service  of  an  employee;  provided,  however,  that  such 
employment  was  not  terminated  by  dismissal  or  suspension  without 
reinstatement,  and  provided  that  the  ti-ansfer  in  emplojTiient  was 
made  with  the  approval  of  the  employing  officers  of  both  lines. 

Bule  No.  6.  —  Service  shall  be  considered  "  continuous  "  from  the 
date  since  which  the  emplo^^nent  has  remained  unbroken;  but  leave 
of  absence,  suspension  for  discipline,  or  temporary  lay-off  (not 
exceeding  one  year)  on  account  of  reduction  of  force,  shall  not  be 
considered  a  break  in  the  continuity  of  service. 

Persons  who  leave  the  service  will  not  be  entitled  to  pension  allow- 
ance, and  if  any  such  persons  shall  be  re-employed,  they  shall  be 
considered,  for  the  purpose  of  the  pension  system,  as  new  employees. 

Rule  No.  7 .  —  In  computing  service  it  shall  be  reckoned  from  the 
last  date  of  entiy  into  the  service  to  the  date  of  retirement,  deduction 
of  the  actual  time  out  of  sen-ice,  as  provided  in  the  foregoing  section, 
being  made,  and  any  fractional  part  of  a  month  being  eliminated 
from  the  final  result. 

Rule  No.  S.  —  The  acceptance  of  a  pension  allowance  shall  not 
debar  a  retired  employee  from  engaging  in  other  business,  but  such 
person  shall  not  re-enter  the  service. 

No  assignment  of  pensions  will  be  permitted  or  recognized. 

Rule  No.  9.  —  No  action  of  the  board  of  directors  in  establishing  a 


150  OLD   AGE  PENSIONS.  [Jan. 

system  of  pensions,  and  no  action  by  the  board  of  pensions  in  the 
operation  of  the  pension  department,  shall  be  construed  as  giving  to 
any  employee  of  this  company  a  right  to  be  retained  in  the  service, 
or  any  right  or  claim  to  any  pension  allowance. 

This  company  expressly  reserves  its  right  and  privilege  to  dis- 
charge from  its  service,  at  any  time,  any  employee,  when  its  interests 
so  require,  without  liability  for  pension. 

Rule  No.  JO.  —  These  rules  may  be  amended  at  any  meeting  by 
vote  of  the  board  of  pensions,  subject  to  approval  of  the  president 
and  board  of  directors. 

The  pension  scheme  embodied  in  an  act  of  the  Massachn- 
setts  Legislature,  passed  in  1909,  authorizing  the  Boston  & 
Maine  Eailroad  and  its  employees  to  establish  a  co-operative 
pension  system,  is  in  several  essentials  very  different  from 
the  plans  of  other  railroad  companies  which  have  just  been 
described.  This  plan  has  not  yet  gone  into  operation,^  as  it 
has  not  been  accepted  by  the  directors  and  the  employees  of 
the  company,  in  accordance  with  the  referendum  provision  of 
the  bill. 

With  rare  exceptions  the  pension  plans  of  the  other  railroad 
companies  are  non-contributory  and  autocratic  in  character. 
That  is,  the  funds  are  furnished  entirely  by  the  company,  and 
the  employees  are  given  little  if  any  share  in  the  manage- 
ment ;  the  pension  system  may  in  many  cases  be  discontinued 
at  any  time  by  action  of  the  corporation  alone.  The  Boston 
&  Maine  plan,  on  the  contrary,  is  contributory  and  co-opera- 
tive. The  i^lan  provides  for  joint  contributions  by  employer 
and  employed,  and  for  participation  of  the  latter  in  the  man- 
agement through  representation  on  the  board  of  trustees.  The 
co-operative  principle  also  appears  in  the  provision  that  makes 
the  establishment  of  the  system  dependent  upon  acceptance 
by  the  employees,  through  two-thirds  vote  of  those  present  and 
voting  upon  the  question. 

The  bill  provides  for  the  formation  of  a  pension  associa- 
tion after  the  adoption  of  its  provision  by  the  board  of  direct- 
ors and  the  employees.  Membership  in  the  association  is 
obligatory  for  all  new  employees.  Persons  already  in  the 
employment  of  the  company  when  the  system  is  established 

>   December  15,  1909. 


1910.]  HOUSE  — No.  1400.  151 

are  not  compelled  to  participate  in  the  pension  system  in  case 
they  have  voted  against  its  acceptance,  and  within  three 
months  thereafter  have  recorded  their  objections  in  writing. 
Members  of  the  association  contribute  a  certain  percentage  of 
their  wages,  not  less  than  1  per  cent,  nor  more  than  3  per 
cent.,  to  create  a  fund  out  of  which  annuities  are  paid  upon 
their  retirement.  The  company  contributes  an  equivalent 
amount,  to  provide  pensions  supplementary  to  the  annuities. 
That  is,  a  member  retired  under  the  provisions  of  the  plan 
receives  an  allowance,  made  up  of  an  annuity  provided  by  his 
contributions  and  a  pension  provided  by  the  contributions  of 
the  company.  The  combined  amount  of  the  annuity  and 
pension  paid  to  any  member  must  be  at  least  $200  dollars  per 
year.  Members  may  also  make  additional  contributions  to 
purchase  extra  annuities. 

The  conditions  of  retirement  as  regards  age  and  service 
period  are  to  be  determined  by  the  board  of  trustees.  Provi- 
sion is  made  for  the  fixing  of  an  age  of  voluntary  retirement, 
an  age  of  compulsory  retirement,  and  a  certain  period  of 
continuous  service  which  shall  entitle  to  a  pension.  The 
board  of  trustees  has  the  general  management  of  the  pension 
system,  under  the  supervision  of  the  State  Insurance  Com- 
missioner and  the  State  Actuary. 

The  pension  fund  is  exempt  from  taxation.  The  right  to 
a  retirement  allowance  is  inalienable.  In  various  ways  the 
rights  of  employees  in  relation  to  the  pension  system  are  more 
definite  and  extensive  than  in  the  usual  corporation  schemes. 

The  commission  has  made  special  inquiry  regarding  retire- 
ment systems  established  by  employers  in  Massachusetts.  A 
circular  letter  of  inquiry  was  sent  out  to  over  1,000  corpora- 
tions and  individual  employers  of  labor  in  this  Common- 
wealth, asking  for  information  concerning  any  scheme  of  old 
age  pensions  or  insurance  which  might  be  in  operation.  To 
this  inquiry  362  replies  were  received.  Of  the  establish- 
ments giving  information,  only  4  have  a  regular  system  of  re- 
tirement pensions ;  several  other  concerns  report  the  grant  of 
occasional   pensions  by  a  special   vote.        It  may  be  noted 


152  OLD   AGE   PENSIONS.  [Jan. 

further  that  45  establishments  report  the  existence  of  benefit 
or  insurance  schemes  not  providing  for  old  age. 

In  explaining  the  absence  of  provision  for  old  age  pensions 
or  insurance,  employers  replying  to  the  inquiry  touch  upon 
two  main  reasons.  In  the  first  place,  it  is  pointed  out  that 
the  existence  of  the  business  itself  is  in  some  cases  too  un- 
certain to  warrant  the  establishment  of  a  system  of  old  age 
pensions  or  insurance.  It  is  clear  that  only  business  con- 
cerns that  are  well  established,  and  sure  of  a  reasonable  degree 
of  permanency,  can  afl^ord  to  undertake  old  age  provisions  for 
their  employees.  In  the  second  place,  attention  is  called  to 
the  fact  that  the  working  force  itself  is  often  unstable  and 
transitory  in  its  make-up.  Employees  come  and  go,  remain- 
ing with  the  concern  only  a  short  •  time,  and  consequently 
establishing  no  claim  to  special  consideration  in  the  form  of 
opportunity  for  old  age  insurance.  In  other  words,  the  con- 
ditions which  must  be  fulfilled  in  order  to  make  possible  the 
introduction  of  a  successful  system  of  old  age  pensions  and 
insurance,  namely,  stability  of  the  business  itself  and  perma- 
nence of  the  working  force,  are  wanting  in  the  great  majority 
of  establishments. 

The  concerns  that  report  the  existence  of  a  regular  pension 
system  are  the  Talbot  Mills,  North  Billerica ;  Gilbert  & 
Barker  Manufacturing  Company,  Springfield ;  the  Simonds 
Manufacturing  Company,  Pittsfield ;  and  the  Boston  Elevated 
Hallway  Company. 

The  Chicopee  Manufacturing  Company,  Chicopee  Falls, 
states  that  there  is  a  plan  in  operation  of  giving  the  privilege 
to  those  who  have  worked  continuously  for  fifty  years  of 
retiring  on  half  pay,  or  working  and  resting  intermittently, 
receiving  half  pay  while  resting  and  full  pay  while  at  work. 
The  concern  has  pensioned  three  persons  by  this  arrangement. 

The  plan  in  operation  in  the  Talbot  Mills  provides  for 
pensions  for  employees  who  have  been  in  the  service  of  the 
company  not  less  than  fifteen  years,  under  the  following  con- 
ditions :  any  such  person  incapacitated  for  labor  through  old 
age  or  through  other  cause  for  which  he  is  not  responsible, 
may  be  retired  on  pension ;  any  such  person  who  has  reached 


1910.]  HOUSE  — No.  1400.  153 

the  age  of  70  years  may  retire  on  pension  at  his  pleasure. 
The  amount  of  the  annual  pension  is  a  certain  percentage  of 
the  average  annual  wages  for  the  ten  years  next  preceding 
retirement ;  for  fifteen  to  thirty-five  years  of  service  the  rate 
is  1  per  cent,  per  year  for  every  year  of  service;  and  for 
periods  longer  than  thirty-five  years  the  pension  is  50  per 
cent,  of  the  average  wages.  !N^o  pension  shall  exceed  $500. 
The  pensioned  employee  who  engages  in  any  employment  for 
compensation,  except  with  the  approval  of  the  management, 
forfeits  a  pension.  No  pension  is  given  when  incapacity  to 
work  is  the  result  of  intemperance,  or  of  a  cause  within  the 
control  of  the  employee. 

The  Gilbert  &  Barker  plan  provides  that  any  officer  or  em- 
ployee who  has  given  twenty-five  years  of  continuous  and 
satisfactory  service  to  the  company,  and  has  attained  the  age 
of  65  years,  may  be  put  on  the  annuity  roll,  at  the  discretion 
of  the  directors,  to  receive  an  allowance  of  25  per  cent,  of  his 
average  pay  for  the  ten  years  preceding  retirement.  Further- 
more, any  officer  or  employee  between  the  ages  of  60  and  64, 
who  has  been  for  twenty  years  in  the  service  of  the  company, 
may  retire  at  his  request,  with  the  approval  of  the  directors, 
or  may  be  relieved  by  the  directors  from  further  service  and 
placed  on  the  annuity  roll,  to  receive  an  allowance  equal  to  50 
per  cent,  of  his  average  pay  for  the  ten  years  preceding  retire- 
ment, this  rate  to  continue  to  the  time  the  recipient  is  65 
years  of  age,  and  the  rate  thereafter  to  be  25  per  cent.  The 
directors  reserve  the  right  at  any  time  to  abolish  or  modify 
the  annuities,  both  in  their  general  form  and  in  their  applica- 
tion to  individuals. 

The  Simonds  Company  plan  provides  for  the  retirement  of 
employees  between  the  ages  of  65  and  70  who  have  become 
unable,  through  disability  or  other  cause,  to  perform  the  active 
duties  of  their  positions.  The  retirement  is  optional,  not 
compulsory;  that  is,  an  employee  who  is  still  in  condition  to 
do  good  work  at  70  years  of  age  is  not  retired  unless  he  so 
desires.  The  retirement  allowance  amounts  to  11/2  per  cent, 
of  the  average  pay  for  the  preceding  five  years,  multiplied  by 
the  number  of  years  of  service. 


154  OLD   AGE   PENSIONS.  [Jan. 

The  Boston  Elevated  retirement  plan  was  adopted  early 
in  1903.  Under  its  provisions  any  call  service  man  unfit  to 
perform  further  service  for  the  company,  who  has  been  con- 
tinuously employed  for  twenty-five  years,  or  who  has  reached 
the  age  of  sixty  years  and  has  been  continuously  employed  for 
fifteen  years,  shall  receive  a  sum  not  exceeding  $25  per  month 
during  the  rest  of  his  life.  If  an  employee  eligible  to  this 
allowance  is  still  capable  of  doing  work,  he  is  given  such  em- 
ployment as  he  can  undertake,  and  is  paid  for  it  at  regular 
rates.  In  case  such  payment  does  not  amount  to  $25  per 
month,  or  the  sum  granted  him  as  a  retiring  allowance,  he  is 
paid  the  difference.  The  number  of  men  to  whom  retire- 
ment allowances  have  been  granted  during  the  past  six  years  is 
79.  Of  this  number,  38  are  now  on  the  list.  The  average 
amount  of  the  allowance  has  been  somewhat  more  than  $25  a 
month,  because  several  employees  who  had  higher  positions  in 
the  operative  department  were  retired  on  pension.  The 
amount  paid  in  allowances  at  the  present  time  is  $922  per 
month. 

It  is  impossible  to  state  the  number  of  employees  pro- 
vided for  under  all  the  pension  systems  in  the  country,  or  the 
amount  of  expenditure  for  pensions.  Returns  gathered  by 
the  Massachusetts  Bureau  of  Statistics  of  Labor  in  1906, 
from  14  railway  companies  operating  pension  systems,  show 
that  the  aggregate  expenditures  from  their  pension  funds 
had  amounted  to  $3,999,886.07.  The  number  of  pensioners 
carried  was  3,806.  An  estimate  for  the  vear  1903,  made  by 
Mr.  Max  Riebenack,  comptroller  of  the  Pennsylvania  Rail- 
road Company,  stated  the  aggregate  annual  appropriation  for 
pensions  by  the  16  pensioning  railway  companies  to  be 
$1,350,000.  The  number  on  the  pension  rolls  was  3,200. 
The  amount  of  railway  mileage  represented  was  about  50,000, 
or  25  per  cent,  of  the  total  mileage  of  the  country ;  the  number 
of  employees  was  500,000,  or  about  38  per  cent,  of  the  total 
number  of  railway  employees. 

The  industrial  corporations  that  have  established  pension 
systems  are  in  the  majority  of  cases  employers  of  labor  upon 
a  very  large  scale.       Indeed,  the  establishment  of  insurance 


1910.]  HOUSE  — No.  1400.  155 

and  pension  systems  seems  to  be  one  of  the  usual  features  of 
the  policy  of  the  large  corporations.  The  number  of  in- 
dustrial workers  who  are  now  provided  for  by  these  pension 
plans  must  represent  a  very  considerable  proportion  of  the 
entire  working  class. 

As  these  pension  plans  have  been  in  operation  only  a  few 
years,  it  is,  of  course,  too  early  to  draw  conclusions  regarding 
the  degree  of  success  attained.  It  is  significant,  however, 
that  many  corporations  have  increased  their  expenditure  for 
pensions,  while  none  —  so  far  as  can  be  learned  —  has  aban- 
doned a  pension  system  once  tried,  or  reduced  the  expenditure 
for  this  purpose.  What  has  been  done  thus  far  appears  to 
represent  a  beginning  in  a  movement  that  promises  to  do 
much  toward  solving,  at  least  in  part,  the  problem  of  in- 
dustrial superannuation.  It  is  a  fact  of  striking  interest 
that,  at  a  time  when  European  governments  are  instituting 
systems  of  State  insurance  and  pensions,  maintained  wholly 
or  partly  by  general  taxation,  the  American  railroad  and  in- 
dustrial corporations  are  attempting  to  solve  this  problem 
on  their  own  initiative,  through  private  systems  supported  by 
the  revenues  of  the  pensioning  company. 

5.     Pension  System  of  the  Friedrich  Krupp  Company, 
•  Essen,  Germany. 

The  welfare  institutions  of  the  Friedrich  Krupp  Company 
have  often  been  described,  but  of  particular  interest  in  this 
connection  are  the  insurance,  savings  and  pension  systems  or 
funds,  which  have  many  features  deserving  of  careful  con- 
sideration ill  the  United  States.  All  of  the  thrift  institu- 
tions of  the  company  are  conducted  solely  for  the  benefit  of 
the  employees,  and  the  company  itself  contributes  substantial 
subsidies  to  secure  more  than  a  commercial  success.  Through 
the  courtesy  of  the  Hon.  Jrihn  F.  Dry  den,  president  of  the 
Prudential  Insurance  Company  of  America,  we  are  able  to 
present  a  summary  account  of  the  Krupp  pension  system.^ 


'  This  material  is  embodied  in  letters  and  reports  made  to  the  Prudential  Insurance 
Company  by  its  statistician,  Mr.  Frcdcriok  T,.  Hoffnjan,  who  made  an  extended  personal 
investigation  in  Ciermanyand  Austria  in  1909.  for  the  purpose  of  obtaining  accurate  and 
conclusive  information  regarding  government  insurance  in  those  countries.  For  an 
account  of  the  savings  and  insurance  features  of  the  Krupp  Company  see  .\ppendix  E. 


156  OLD   AGE   PENSIONS.  [Jan. 

The  pension  system  of  the  company  is  quite  complex,  and 
difficult  of  precise  explanation.  It  is  compulsory,  and  on 
this  account  much  controversy  has  arisen,  which  has  led  to 
litigation  and  interpellation  in  the  Eeichstag  through  the  agi- 
tation of  members  of  the  socialistic  party.  The  question  is 
not  so  much  the  principle  of  compulsion  as  the  principle  of 
forfeiture  of  payments  made  by  the  members  who  leave  the 
employ  of  the  firm.  The  system  was  introduced  many  years 
ago,  but  has  been  amplified  to  enlarge  the  scope  of  government 
pensions,  which  seldom  exceeds  20  marks  a  month.  It  is 
explained  that  formerly  the  pension  premium  paid  by  the 
workmen  amounted  to  1.3  per  cent,  of  the  wages,  but  they 
now  amount  to  2.5  per  cent.,  to  which  the  firm  adds  a  neces- 
sary subsidy.  The  application  for  work  carries  with  it  an 
application  for  membership  in  the  pension  fund. 

Financially,  the  pension  fund  is  of  great  importance,  and 
the  funds  amount  to  nearly  20,000,000  marks,  or  about 
$5,000,000.  The  pension  system  is  limited  to  wage  earners 
whose  earnings  do  not  exceed  6.75  marks  a  day,  or  2,000 
marks  a  year.  The  member  must  pay  an  initiation  fee  of  one 
and  a  half  times  the  daily  pay,  and  after  that  2.5  per  cent,  of 
the  earnings,  which  are  deducted  and  accounted  for  on  the  pay 
envelope.  The  firm  pays  annually  by  way  of  subsidy  an 
amount  equivalent  to  the  full  sum  paid  by  the  workmen,  •  The 
pensionable  period  begins  after  twenty  years,  but  in  case  of 
men  employed  at  very  heavy  work,  after  fifteen  years.  Par- 
ticipation in  the  system  begins  with  the  eighteenth  year  of 
life.  The  completed  sixty-fifth  year,  or  forty  years  of  service, 
gives  the  workmen  as  well  as  the  firm  the  right  to  pensionable 
retirement.  Half-invalids,  or  those  partially  incapacitated, 
receive  pro  rata  pensions.  The  following  table  will  illustrate 
the  pension  system  in  actual  practice :  — 


1910.] 


HOUSE  — No.  1400. 


157 


Pension   System   of  the  Friedrich   Krupp  Company. 


(1) 

Yeahs 

OF 

Service. 


(2) 

Pens  on  for  an 

Annual 

Income  of 

2,000  Marks. 


(3) 
Widow's  Pen- 
sion One-half 

of  Pension 
in  Column  (2). 


20, 
25, 
30. 
35, 
40, 
44, 


Marks. 
800 

950 

1,100 

1,250 

1,400 

1,500 


Marks. 
400 

475 

550 

625 

700 

750 


(4) 

Pension  forIOne[Child 

WHEN  THE  Mother  is  alive 

OR   IS   DEAD. 


.\]ive. 


Marks. 
80 

95 

110 

125 

140 

150 


Dead. 


Marks. 
120.00 

142.50 

165.00 

187.50 

210.00 

225.00 


In  other  words,  the  workman  receives  after  twenty  years  of 
service  a  pension  of  40  per  cent.,  his  earnings  increasing 
yearly  by  1.5  per  cent,  up  to  a  maximum  after  forty-four 
years  of  75  per  cent.  When  the  pensioner  dies,  his  widow  is 
entitled  to  50  per  cent,  of  the  pension,  and  every  child  to  10 
per  cent.,  but  mother  and  children  together  cannot  receive 
more  than  90  per  cent,  of  the  pension;  but  if  the  mother  is 
dead,  each  child  receives  15  per  cent,  of  the  pension  of  the 
father.  The  firm  withholds  one-half  the  government  pen- 
sion to  partly  reimburse  itself,  while  the  other  half,  of  course, 
tends  to  increase  the  income  of  the  workman  in  his  old  age. 
But  the  firm  has  gone  far  beyond  this  in  its  wonderful  and 
truly  magnificent  welfare  institutions  for  the  aged  and 
infirm. 

The  pension  system,  on  December  31,  1908,  included  some 
32,441  workmen ;  but  the  average  number  employed  during 
the  year  has  somewhat  declined,  due  to  the  really  hard  and 
alarmingly  distressed  state  of  German  industry  in  all  its 
branches  at  the  present  time.  The  average  membership  for 
a  period  of  years  has  been  as  follows :  — 


158 


OLD   AGE   PENSIONS. 


[Jan. 


Pension  System  of  the  Friedrich  Krupp  Company. 


Year. 

Average 
Membersh.p. 

Yeak. 

Average 
Membership. 

1884 

1888, 

1893 

10,214 
13,168 
16,936 

1898 

1903 

1908 

23,427 
22,401 
32,208 

On  January  1,  1909,  some  7,460  of  the  members  of  the 
fund  had  a  service  record  of  at  least  fifteen  years,  and  of  this 
number  4,081  had  been  at  work  more  than  twenty  years. 
Naturally,  the  proportion  of  the  aged  under  a  definite  pension 
system  tends  to  increase,  but  what  the  increase  has  been  in 
recent  years  is  not  known.  It  would  seem,  however,  that  the 
future  is  viewed  with  some  apprehension,  considering  the 
possible  financial  efi^ect  of  a  material  decline  in  the  adult 
death  rate. 

Up  to  December  31,  1908,  the  pension  fund  had  paid  out 
20,226,000  marks.  The  average  pension  paid  in  1908  was 
683  marks  in  the  case  of  men,  336  marks  in  the  case  of 
widows,  and,  including  payments  on  account  of  children,  366 
marks.  To  the  first-named  average,  in  the  case  of  men, 
comes  in  many  (and  probably  in  most)  cases  the  government 
invalidity  pension,  which  varies  between  125  and  248  marks, 
and  which  will  average  186.50  marks ;  and  also,  but  in  a  lesser 
number  of  cases,  the  government  old  age  pension,  which 
varies  between  163  and  213  marks.  It  is  stated  that  the 
average  sum  paid  in  pension  (including  the  government  pen- 
sions) to  a  pensioner  of  the  Krupp  Company  is  870  marks, 
which,  even  by  an  American  standard  of  life,  represents 
quite  a  comfortable  income,  but  which,  by  an  average  German 
wage  earner's  income  of  about  1,500  marks,  gives  him  about 
half  what  he  has  been  paid  during  his  active  working  lifetime. 
Of  the  pensions  granted  in  1908,  the  average,  including  the 
government  invalidity  pension,  was  940  marks.  The  average 
widow  and  orphan  pension  was  408  marks.  In  this  connec- 
tion the  following  tabulation  will  prove  of  interest,  as  showing 
the  range  of  the  pensions  between  the  lowest  and  highest 
amounts  granted  in  1908  :  — 


1910.] 


HOUSE  — No.  1400. 


159 


Pensions  paid  by  the  Friedkich  Krupp  Company  in  1908. 


Amount  of  Pension 
(Marks). 

Number  of 
Pensions. 

Per 
Cent. 

.■Vmount  of  Pension 
(Marks). 

Number  of 
Pensions. 

Per 
Cent. 

300-360 

4 

.2 

720-780,      . 

233 

11.3 

360-420 

18 

.9 

780-840,      . 

226 

11.0 

420-480.  .... 

57 

2.8 

840-900,      . 

174 

8.4 

480-540 

135 

6.5 

900-960,      . 

152 

7.4 

540-600 

199 

9.7 

960-1,020,      . 

97 

4.7 

600-660 

246 

11.9 

1,020-1,080,      . 

77 

3.7 

660-720,  .... 

229 

11.1 

1,080-1,500,      . 

215 

10.4 

The  age  distribution  of  the  2,062  pensioners  in  receipt  of 
pensions  on  December  31,  1908,  was  as  follows:  at  ages 
35-40,  there  were  4;  at  40-45,  59 ;  at  45-50,  503 ;  at  50-55, 
503;  at  55-60,  678;  at  60-65,  464;  at  65-70,  150;  at  70-75, 
22 ;  and  at  75-80,  1 ;  so  that  there  were  only  173,  or  8.4  per 
cent.,  of  the  2,062  persons  above  the  usual  pensionable  age 
of  65. 

The  amount  of  distribution  of  widows'  pensions  was,  of 
course,  quite  different,  on  account  of  the  fact  that  they 
receive  only  50  per  cent,  of  the  premiums  paid  to  men ;  but, 
of  the  1,466  paid  in  1908,  as  many  as  70  were  in  amounts  of 
600  to  720  marks  per  annum,  12  at  720  to  840,  and  6  at  840 
to  1,080  marks.  As  emphasizing  the  peculiar  danger  of  such  a 
plan,  mention  may  be  made  of  the  fact  that,  of  the  pensioned 
widows,  3  were  as  young  as  25-30,  and  22  were  between  the 
ages  of  30  and  35 ;  while  also,  in  contrast,  150  were  of  65 
and  over,  or  10.2  per  cent,  of  the  1,466  under  consideration. 
Of  every  100  widows,  43  had  to  support  children. 

As  far  as  the  present  experience  has  gone,  the  average 
pension  duration  has  been  ten  years  for  men  and  about  four- 
teen and  a  half  years  for  women.  One  man  has  drawn  a 
pension  for  thirty,  and  one  woman  for  thirty-four  years. 
Many  of  the  pensioners  have  moved  away  to  inland  ])laces, 
where  the  cost  of  living  is  much  less,  so  that  the  value  of  the 
pension  is  greater  than  it  would  be  in  Essen  itself.  Tn  such 
case  the  pensioner  must,  once  a  year,  send  a  medical  proof  of 
being  alive.     In  other  and  especially  deserving  eases  the  pen- 


160  OLD   AGE   PENSIONS.  [Jan. 

sioner  can  secure  a  beautiful  home  in  the  colony  built  by  the 
firm.  At  the  time,  219  pensioners,  with  their  families,  and  29 
widowers  and  27  widows,  live  in  this  colony,  which  in  itself 
illustrates  the  ever-increasing  importance  of  the  housing 
question  in  its  relation  to  insurance.  The  firm  has  tried  the 
house  purchase  plan,  through  instalments,  by  its  employees, 
but  it  was  found  unsuitable,  and  they  therefore  retain  control 
of  a  large  number  of  dwellings,  suitable  to  both  workmen  and 
officials.  The  pension  fund  has  the  legal  status  of  a  cor- 
poration, absolutely  independent  of  the  firm  of  Friedrich 
Krupp.  The  management  is  jointly  elected  by  the  firm  and 
the  employees,  and  included  in  the  board  of  directors  are  such 
occupations  as  machinists,  turners,  melters,  etc. 

In  1908  the  total  income  of  the  pension  fund  was 
3,367,507  marks,  and  of  this  amount  54,299  marks  were  for 
admission  fees  and  1,229,805  marks  were  the  regular  pay- 
ments on  the  part  of  the  employees  (2.5  per  cent,  of  their 
wages),  to  which  the  firm  added  the  same  amount  as  a  subsidy. 
There  was  paid  out  in  pensions  the  sum  of  1,978,241  marks, 
and  for  other  expenses  2,718  marks.  The  firm  pays  also  the 
quite  considerable  expense  of  administration,  which  is  not 
included  in  the  foregoing  account.  The  investment  of  the 
20,551,309  marks  is  all  in  government  or  State  securities 
earning  from  3  to  4  per  cent.  As  is  usual,  the  book  value  of 
the  investment  is  often  somewhat  less  than  the  stock  exchange 
quotations  on  the  31st  of  December,  as  required  by  law.  The 
fund  is  not  subject  to  the  imperial  supervising  insurance 
office,  but  to  the  direct  supervising  power  of  the  local  govern- 
ment and  the  police. 

What  has  been  done  by  the  Krupp  Company  has  been  done 
to  a  lesser  degree  by  most  of  the  large  German  industrial 
undertakings.  At  best  and  at  most  the  security  and  support 
obtained  through  government  insurance,  but  especially  in  the 
case  of  old  age  pensions,  is  a  minimum,  to  which  most  of  the 
large  factories,  mines,  etc.,  add  to  improve  the  conditions  of 
life  for  their  employees. 

At  Bcchum,  a  few  miles  from  Essen,  is  the  Bechum  Steel 
Company,  a  concern  employing  about  5,000  men.  They 
also  have   a   pension  fund,   established   in   1895,   upon  the 


1910.]  HOUSE  — No.  1400.  161 

Ui'iieral  prinoi})le  of  the  Krupp  Company ;  and,  beginning 
with  ir)4  members,  they  had  in  1908  some  354  members. 
This  fnnd  is  onlv  for  officials  and  clerks  earning  at  least 
2,000  marks  a  year.  This  practically  excludes  workmen 
generally,  whose  earnings  will  not  average  much  more  than 
1,500  marks  a  year.  It  is  provided  in  this  case  that  in  the 
event  of  a  man  leaving  the  service,  and  having  paid  for  less 
than  five  years,  his  payments  are  forfeited  to  the  fund.  Be- 
tween the  fifth  and  tenth  year  of  membership,  in  the  case  of 
withdrawal  the  amounts  paid  during  this  period  are  returned 
without  interest,  while  after  ten  years  of  membership  there 
are  some  additional  privileges.  Every  member  has  to  pay  an 
entrance  fee  of  one  month's  pay,  and  in  the  case  of  a  subse- 
quent increase  in  pay  a  proportionate  payment  has  to  be  made. 
After  this  formality  has  been  complied  with,  the  member 
pays  3  per  cent,  of  his  annual  income,  which  amount  is  de- 
ducted from  the  pay  of  the  employee  by  the  company  in  behalf 
of  the  fund.  Persons  with  more  than  6,000  marks  salary 
are  not  eligible  to  the  fund.  The  company  pays  by  way  of 
subsidy  at  the  end  of  each  vear  as  much  again  as  the  members 
have  paid,  so  that  the  pensions  are  practically  secured  at 
half  cost.  After  five  years  of  membership  the  payments  can 
be  increased  from  3  to  4  per  cent.,  if  the  association  finds  it 
necessary  to  do  so  to  carry  out  its  obligations.  Correspond- 
ingly, however,  if  the  membership  fees  are  increased,  the 
company  will  make  an  equal  addition  to  the  annual  income  of 
the  fund. 

The  benefits  are,  in  brief,  a  retirement  pay  after  at  least 
five  years'  membership  of  fifteen-sixtieths  of  the  salary  then 
attained,  and  this  is  increased  with  each  additional  year  by 
one-sixtieth  up  to  the  maximum  of  forty-five-sixtieths  of  the 
last  received  annual  salary  of  the  employee.  There  are  many 
other  and  special  provisions  which  qualify  the  conditions 
under  which  pensions  are  payable,  but  M'hich  are  here  omitted. 
Full  details  of  the  fund  are  given  in  the  by-laws,  and  an 
annual  report  is  published,  as  in  the  ease  of  the  Kru])]) 
pension  fund.  On  September  11,  1906,  the  funds  of  the 
association  amounted  to  2.280,000  marks;  the  present  total 


162  OLD   AGE    PENSIONS.  [Jan. 

is  about  3,000,000  marks.  The  normal  age  at  which  the  pen- 
sion begins  is  65,  except  in  the  case  of  earlier  and  complete  in- 
capacity for  work.  The  supjDort  of  widows  and  children  is 
included,  and  in  the  same  proportion  as  in  the  case  of  Krupp. 
Up  to  date,  the  company  has  paid  about  1,150,000  marks  to 
the  fund  as  a  voluntary  addition,  aside  from  the  4  per  cent. 
which  is  paid  annually.  For  all  its  welfare  institutions  the 
company,  up  to  1908,  had  paid  nearly  10,000,000  marks. 
What  is  being  done  voluntarily  is,  of  course,  a  material  addi- 
tion to  what  is  being  done  in  compliance  with  the  various  laws 
governing  workingmen's  insurance,  and  the  combination  pro- 
vides for  German  workingmen  a  degree  of  economic  and  social 
security  unattained  in  any  other  country  of  the  world. 

6.     Old  Age  Benefits  of  British  Feiendly  Societies. 

The  friendly  societies  of  Great  Britain  make  provision  for 
old  age  insurance  only  to  a  limited  extent.  These  societies 
have  been  defined  by  W.  F.  Willouohbv^  as  "  voluntarv  insti- 
tutions,  organized  by  the  middle  and  working  classes  for  the 
purpose  of  aiding  their  members  in  times  of  distress.  The 
assistance  given  to  them  includes  relief  in  almost  every 
possible  contingency  in  which  a  member  is  subjected  to  un- 
usual expense,  or  is  unable  to  earn  his  accustomed  wages. 
They  thus  insure  against  sickness,  accident,  unemployment, 
and,  to  some  extent,  against  old  age."  These  societies  pro- 
vide also  for  the  payment  of  so-called  death  benefits,  a  form 
of  insurance  designed  to  pay  burial  expenses.  The  old  age 
insurance  plays  a  far  less  important  role  in  the  operations  of 
these  societies  than  the  insurance  against  sickness  and  the 
provision  of  death  benefits. 

The  development  of  voluntary  insurance  through  the 
friendly  societies  is  one  of  the  most  interesting  phases  of  the 
social-economic  history  of  England.  The  historical  germ  of 
these  societies  may  be  found  in  the  medieval  trade  guilds. 
In  their  present  form,  however,  the  friendly  societies  came 
into  existence  about  the  first  half  of  the  seventeenth  century. 
After  the  rise  of  the  factory  system  in  the  nineteenth  century 
these  associations  expanded  rapidly. 


'   W.  F.  Willoughby,  "Workingmen's  Insurance,"  p.  235. 


1910.]  HOUSE  — No.  1400.  163 

lu  the  beginning  the  friendly  societies  were  loose  organiza- 
tions, formed  for  the  purpose  of  mutual  assistance  on  the 
part  of  members  in  case  of  death  or  sickness.  When  a  case ' 
of  illness  or  death  occurred,  a  collection  was  taken  among  the 
members  for  the  benefit  of  the  afflicted  member  or  his  family. 
Later,  the  amount  of  relief  to  be  granted  and  the  amount  of 
assessment  to  be  levied  upon  each  member  were  fixed.  Then, 
in  the  course  of  time,  assessments  were  abolished  and  regular 
dues  were  established.  At  first  the  dues  were  uniform  for 
all  ages.  Under  this  crude  arrangement  the  younger  mem- 
bers were  disproportionately  burdened  to  meet  the  expenses 
of  benefit  payments,  since  the  liability  to  sickness  increases 
with  advancing  age.  Many  societies,  consequently,  got  into 
serious  financial  difficulties.  An  improved  system  of  dues 
was  therefore  adopted,  in  which  contributions  were  graduated 
according  to  the  age  of  members  upon  admission. 

As  regards  the  provision  made  by  friendly  societies  for  old 
age  pensions,  Mr.  R.  P.  Hardy,  an  English  actuary,  in  a 
report  prepared  for  the  first  Royal  Commission  on  the  Aged 
Poor,  in  1893,  distinguishes  two  classes  of  payment  for  this 
purpose,  namely,  direct  and  indirect.  "  A  few  societies,"  he 
states,  "  offer  a  distinct  pension  benefit  at  rates  of  contribu- 
tion professedly  corresponding  to  the  liability  undertaken." 
This  form  of  direct  pension,  however,  has  not  been  utilized 
largely,  partly  because  of  lack  of  means  to  pay  old  age  pension 
dues  in  addition  to  contributions  to  the  sickness  and  funeral 
funds ;  partly  because  of  disinclination  to  take  advantage  of 
a  form  of  investment  that  yields  only  remote  returns.  The 
usual  form  of  old  age  pension,  therefore,  is  that  provided 
through  the  ordinary  sickness  allowance,  which  may  be  paid 
during  the  prolonged  invalidity  of  advanced  years.  Regard- 
ing the  adequacy  of  the  existing  provision  for  old  age  pen- 
sions, Mr.  Hardy  observes  that,  if  not  absolutely  untrust- 
worthy, it  is  at  least  of  a  very  shady  description.  "  Upon 
the  whole,"  he  states,  "  as  far  as  the  mass  of  the  existing 
friendly  societies  go,  I  consider  that  no  sound,  and  in  none  a 
sufficient,  provision  exists  for  old  age  relief,  in  the  sense  now 
called  for  by  public  opinion." 

An  inquiry  sent  out  by  the  British  Old  Age  Pension  Com- 


164  OLD   AGE   PENSIONS.  [Jan. 

mittee  of  1898  to  175  of  the  principal  friendly  societies 
brought  out  the  fact  that  28  of  the  34  societies  that  made 
reply  to  the  question  had  some  provision  for  the  payment  of 
superannuation  or  retirement  benefits ;  19  societies  that  sup- 
plied details  regarding  the  number  of  pensioners  and  the 
amount  of  pensions  gave  sick  pay  to  15,750  members  over 
65  years  of  age,  out  of  a  total  number  of  members  above  that 
age  of  44,278.  The  amount  paid  in  sick  pay  to  these  per- 
sons was  £118,791.  These  societies  had  an  aggregate  mem- 
bership of  1,588,165.  The  Manchester  Unity,  the  largest 
of  the  great  affiliated  orders  of  friendly  societies,  replied  to 
the  question,  "  What  provision  does  the  society  make  for  its 
aged  members  by  pension,  or  permanent  sick  pay  ?  "  as  fol- 
lows :  — 

Branches  as  a  nile  provide  for  sick  pay  through  life,  although 
several  districts  in  the  society  have  lodges  which  do  not  admit  new 
entrants  unless  they  subscribe  for  superannuation  benefits.  The 
society  has  a  central  (or  unity)  superannuation  fund,  to  which  18 
members  subscribe,  and  about  1,100  membei's  subscribe  in  their 
respective  lodges  for  superannuation  benefits.  Amendments  have 
been  recently  made  in  the  general  rules  providing  for  the  admission 
of  persons  at  and  above  1  year  of  age,  and  tables  of  contributions 
and  benefits  inserted  providing  for  superannuated  benefits  of  such 
members  on  arriving  at  65,  provision  for  the  contributions  being 
both  returnable  and  non-returnable.  The  general  rules  of  the  order 
stipulate  that  sick  pay  should  not  be  paid  unless  a  member  is  suffer- 
ing from  some  sj^ecific  sickness  requiring  medical  attendance. 

7.     Old  Age  Benefits  of  Fratekxal  Orgaiv'izations. 

Fraternal  insurance  is  insurance  supplied  by  incorporated 
associations  to  their  members  on  the  co-operative  plan.  The 
form  of  insurance  is  commonly  that  of  death  benefits.  Fre- 
quently, however,  provision  is  also  made  for  sickness,  accident, 
invalidity,  and  even  old  age  benefits. 

Fraternal  insurance  had  its  origin  in  Great  Britain  through 
the  friendly  societies.  From  Great  Britain  the  fraternal 
insurance  migrated  to  the  United  States.  The  early  history 
of  the  movement  is  strewn  with  financial  wrecks.  At  first  the 
rates  were  often  made  too  low,  and  manv  societies  became 


1910.]  HOUSE  — No.  1400.  165 

insolvent.  Later,  the  adjustment  of  rates  was  placed  on 
a  scientific  basis.  With  scientifically  adjusted  rates,  and 
under  proper  supervision,  fraternal  insurance  has  a  legitimate 
l)lace,  and  undoubtedly  will  continue  to  provide  in  part  for  the 
insurance  needs  of  a  considerable  portion  of  the  population. 

So  far  as  old  age  insurance  or  pensions  is  concerned,  the 
amount  of  insurance  provided  by  fraternal  beneficiary  cor- 
porations in  this  Commonwealth  is  so  small  as  to  be  practi- 
cally a  negligible  factor.  Ninety-five  Massachusetts  corpora- 
tions of  this  class  are  listed  in  the  annual  report  of  the  State 
Insurance  Commissioner  for  1907  as  doing  business  in  Massa- 
chusetts, and  20  outside  corporations.  But  only  3  organiza- 
tions in  the  entire  number  provide  any  benefit  that  may  be 
classed  as  an  old  age  pension.  The  reason  for  this  condition 
is  that  the  law  governing  the  fraternal  beneficiary  corpora- 
tions does  not  authorize  them  as  a  class  to  pay  old  age  benefits. 

The  general  provisions  relating  to  the  incorporation  of 
fraternal  beneficiary  societies  do  not  include  the  payment  of 
old  age  benefits  among  the  objects  for  which  they  may  be  in- 
corporated. Section  1  of  chapter  119  of  the  Eevised  Laws, 
which  governs  the  incorporation  of  such  societies  in  this  State, 
])rovides  that :  — 

Seven  or  more  persons,  residents  of  this  commonwealth,  may  form 
;i  fraternal  beneficiary  corporation  for  the  purpose  of  providing  for 
ihp  i)aynieiit  of  benefits  in  the  ease  of  death,  or  disability,  or  of  both. 
The  disability  may  be  temporary  or  permanent,  and  the  result  of 
-ickness  or  of  accident.  Any  educational,  charitable,  benevolent  or 
social  purpose  may  be  united  therewith. 

Ir  will  be  observed  that  this  section  does  not  recognize  the 
payment  of  old  age  benefits  as  one  of  the  purposes  of  these 
organizations. 

In  a  later  section  of  the  laws  relating  to  the  incorporation 
of  fraternal  beneficiary  associations,  the  pa^nnent  of  long 
service  annuities,  analogous  to  old  age  benefits,  is  authorized 
in  the  case  of  organizations  whose  membership  is  limited  to 
public  employees.  This  exception  is  made  by  section  11  of 
chapter  119,  the  second  clause  of  which  reads:  — 


166  OLD   AGE   PENSIONS.  [Jan. 

A  corporation  organized  as  aforesaid  which  limits  its  membership 
to  the  permanent  employees  of  towns  or  cities,  the  commonwealth, 
or  the  federal  government,  and  which  does  not  pay  death  benefits, 
may  pay  annuities  or  gratuities  contingent  upon  disability  or  long 
service,  and  may  fix  the  amount  of  the  annual  assessment  therefor. 

Under  this  excej^tion,  3  associations  are  now  paying  long 
service  benefits,  which  are  practically  old  age  pensions. 
These  are  the  Somerville  Police  Kelief  Association,  the  Boston 
Teachers'  Benefit  Association,  and  the  Teachers'  Annuity 
Guild. 

Another  exception  of  the  law  is  permitted  by  section  12  of 
chapter  119,  which  reads  as  follows:  — 

A  fraternal  beneficiary  corporation,  —  or  an  association  which 
limits  its  membership  to  a  particular  order,  class  or  fraternity,  or  to 
the  employees  of  towns  or  cities,  the  commonwealth,  or  the  federal 
government,  or  of  a  designated  firm,  business  house  or  corporation, 
—  or  a  secret  fraternity  or  order,  —  or  a  purely  charitable  associa- 
tion or  corporation  existing  on  the  twenty-eighth  day  of  June  in  the 
year  eighteen  hundred  and  ninety-nine  or  on  the  twenty-third  day  of 
'May  in  the  year  nineteen  hundred  and  one,  —  any  one  of  which  pays 
a  death  or  funeral  benefit  not  exceeding  two  hundred  dollars,  or 
disability  benefits  not  exceeding  ten  dollars  a  week,  or  an  annuity 
or  gratuity  contingent  upon  length  of  service  not  exceeding  five  hun- 
dred dollars  in  any  one  year,  or  any  or  all  of  said  benefits,  and 
which  is  not  conducted  as  a  business  enterprise  or  for  profit,  may 
transact  in  this  commonwealth  such  business,  without  otherwise  con- 
forming to  the  provisions  of  this  chapter. 

Under  this  section  it  would  be  possible  for  fraternal  bene- 
ficiary corporations  of  the  classes  indicated  to  pay  long 
service  annuities,  substantially  of  the  character  of  old  age 
pensions.  As  a  matter  of  fact,  however,  no  such  corpora- 
tions, so  far  as  can  be  learned,  are  now  paying  old  age  benefits 
in  the  State. 

Foreign  corporations  which  pay  death  benefits  are  not  ad- 
mitted under  the  present  law  to  do  business  in  this  Common- 
wealth. Section  13  of  chapter  119  provides  that  fraternal 
beneficiary  corporations,  organized  under  the  laws  of  other 
States,  and  "  paying  only  disability  and  death  benefits,"  may 


1910.]  HOUSE  — No.  1400.  167 

do  business  in  Massachusetts.     This  restriction  prevents  for- 
eign corporations  from  paying  old  age  benefits  in  this  State. 

The  Somerville  Police  Relief  Association,  which  is  one 
of  the  3  corporations  paying  long  service  gratuities,  is  a  small 
organization,  and  according  to  its  last  report  had  only  3  an- 
nuitants of  this  class  on  its  books.  The  provisions  govern- 
ing the  payment  of  such  annuities  require  ten  years  or  more 
( .f  service  as  a  condition  for  eligibility.  The  recipient  must, 
also,  have  been  discharged  or  pensioned  by  the  police  depart- 
ment. The  amount  of  the  annuity  is  computed  on  the  basis 
of  75  per  cent,  of  a  proportionate  part  of  the  net  funds  accu- 
mulated during  the  membership  of  the  beneficiary. 

The  Boston  Teachers'  Mutual  Benefit  Association  had,  on 
January  1,  1909,  181  annuitants  on  its  pay  roll.  The  amount 
])aid  to  annuitants  in  1908  was  $14,369.69.  The  constitu- 
tion of  this  association  provides  for  the  payment  of  an  initia- 
tion fee  of  $3  by  each  member,  and  for  an  assessment  of  l^  of 
1  per  cent,  of  the  annual  salary  of  members  receiving  $1,000 
or  less,  annuallv,  with  cumulative  assessment  of  members  re- 
ceiving  salaries  in  excess  of  $1,000,  up  to  a  maximum  limit 
of  $5  for  the  total  annual  assessment  of  any  member.  The 
permanent  fund  of  the  association  is  made  up  of  gifts,  lega- 
cies and  the  like,  and  the  total  amount  received  from  initia- 
tion fees  and  assessments,  less  the  current  expenses,  during 
the  first  two  years  from  the  date  of  organization,  together 
with  50  per  cent,  of  the  initiation  fees  and  assessments  re- 
ceived thereafter.  The  annuity  fund  consists  of  50  per  cent, 
of  the  assessments  and  initiation  fees  and  the  entire  income 
from  the  permanent  fund.  The  whole  of  the  annuity  fund, 
less  the  current  expenses,  is  "  divided  equitably  among  the 
annuitants,  provided  that  no  annuity  shall  exceed  60  per  cent, 
of  the  yearly  salary  at  the  time  of  retirement,  and  that  no 
annuity  shall  exceed  the  sum  of  $600."  Members  who  be- 
come either  physically  or  mentally  incapacitated  for  school 
work,  and  all  members  after  a  term  of  service  of  thirty  years, 
may  be  retired  and  may  be  granted  annuities  as  thus  pro- 
vided. 

The  Teachers'  Annuity  Guild  is  a  State  organization.    The 


168  OLD   AGE   PENSIONS.  [Jan. 

membership  is  confined  by  the  by-laws  to  teachers  in  the  pub- 
lic schools  of  Brookline,  Cambridge,  Chelsea,  Lowell,  Lynn, 
Newton,  Somerville,  Waltham,  and  such  other  cities  or  towns 
as  have  been  or  shall  be  admitted  by  a  two-thirds  vote  of  the 
board  of  trustees.  The  present  membership  represents  32 
cities  and  towns.  This  association  had  169  annuitants  on 
its  list  December  31,  1908.  The  amount  paid  in  annuities 
during  the  preceding  year  was  $14,884.30.  The  initiation 
fee  is  $3.  The  regular  assessment  is  ll/o  per  cent,  of  the 
rating  to  which  the  member  is  assigned.  For  purposes  of 
assessment,  members  are  divided  into  two  groups,  with  rat- 
ings of  $500  and  $1,000.  The  permanent  fund  is  made  up 
of  40  per  cent,  of  the  total  amount  received  from  current 
assessments,  together  with  all  receipts  from  other  sources. 
.The  annuity  fund  consists  of  55  per  cent,  of  the  total  amount 
received  from  current  assessments  and  the  entire  income  of 
the  permanent  fund,  except  such  amount,  not  exceeding  10 
per  cent,  of  the  income,  as  may  be  required  to  balance  the 
expense  fund  for  the  current  year.  The  latter  fund  con- 
sists of  5  per  cent,  of  the  total  amount  received  annually  from 
current  assessments.  The  annuities  are  based  upon  the  rat- 
ing of  the  group,  the  annuities  of  the  higher  group  being 
double  those  of  the  lower.  The  entire  annuity  fund  is  di- 
vided among  the  annuitants  each  year.  Members  who,  in 
the  opinion  of  the  medical  examiners,  are  in  all  probability 
permanently  incapacitated,  either  physically  or  mentally,  for 
further  school  work,  and  all  members  after  thirty-five  years 
of  service,  may  be  retired  upon  resigning  their  positions  and 
may  receive  annuities  as  provided.  A  member,  whether  ac- 
tive or  retired,  otherwise  entitled  to  an  annuity,  shall  receive 
an  annuity  on  the  basis  of  the  $500  group  when  he  shall  have 
paid  a  sum  which  shall  equal  thirty  annual  assessments  of 
that  group.  If  the  member  belongs  to  a  higher  group,  he 
shall  have  his  annuity  based  on  the  rate  for  the  higher  group, 
when  the  total  amount  paid  shall  equal  thirty  annual  assess- 
ments of  that  group. 

A  circular  of  inquiry  addressed  to  60  of  the  leading  fra- 
ternal beneficiary  corporations  organized  outside  of  the  State 


1910.]  HOUSE  — No.  1400.  169 

of  Massachusetts  brought  oO  replies.     Of  the  associations  re- 
plying, 31  stated  that  they  pay  an  old  age  pension  and  an- 
nuity allowance,  or  gratuity  in  some  form;   5  have  no  pro- 
vision for  old  age  benefits.     Some  of  the  latter,  however,  pay 
benefits  for  total  and  permanent  disability.      The  age  of  70 
is  the  usual  age  at  which  an  old  age  pension  is  payable. 
Twenty-four  societies  out  of  26  answering  the  inquiry  on  this 
point  give  the  age  TO,  and  2  the  age  75,  as  the  pensionable 
age.     In  many  cases  permanent  disability  is  also  required 
as  a  condition  for  the  receipt  of  an  old  age  pension.     The 
amount  of  the  pension  is  commonly  one-tenth  of  the  face 
value  of  the  insurance  certificate  carried  by  the  member.     It 
is  usually  provided  that  the  one-tenth  shall  be  paid  annually 
until  the  whole  amount  of  the  certificate  has  been  cancelled, 
or  for  ten  years,  or  until  the  age  of  80.     Twenty-five  asso- 
ciations pay  this  amount  of  benefit.     Two  societies  pay  only 
one-twentieth  of  the  amount  of  the  certificate;  1  pays  one- 
fifth  in  five  instalments;  and  1  pays  one-half  of  the  certifi- 
cate upon  its  surrender.     The  great  majority  of  the  societies 
have  thus  far  paid  nothing  on  account  of  old  age  benefits,  as 
I  thev  have  been  oraanized  but  a  short  time,  and  payments  are 
not  yet  due.     Fourteen  societies  report  payments  on  this  ac- 
count, as  follows:  $100  for  2  members;  $200  for  1  member; 
$200  for  2  members ;  $400  for  1  member ;  $400  for  2  mem- 
bers; $3,896.40  for  12  members;  $7,276.58  for  17  members; 
$2,642.73  for  24  members;  $5,700  for  34  members;  $5,125 
for  56  members;  $10,000  for  200  members;  $14,800  for  a 
number  of  members  unstated;  $49,021.85  for  385  members; 
and  $104,779.49  for  748  members. 

In  general,  fraternal  insurance  provides  old  age  annuities 
only  to  a  very  limited  extent.  Its  chief  function  is  the  pay- 
ment of  death  benefits  to  the  family  or  heirs  of  the  deceased 
members.  It  should  be  observed,  furthermore,  that  this  in- 
surance reaches  the  members  of  the  working  class  only  to  a 
comparatively  slight  degree,  and  the  ranks  of  low-paid  labor 
hardlv  at  all. 


170  OLD   AGE   PENSIONS.  [Jan. 


8.        SUPEEANNUATION  BENEFITS  OF   TkADE  UnIONS. 

The  trade  unions  have  thus  far  done  comparatively  little 
in  the  way  of  providing  opportunity  for  insurance  against  old 
age.  The  older  British  unions  have  gone  further  in  this  di- 
rection than  the  labor  organizations  of  the  United  States. 
Even  in  Great  Britain,  however,  the  number  of  unions  that 
pay  superannuation  benefits  is  small.  In  1904,  the  last  year 
for  which  returns  are  available,  40  unions  paid  superannua- 
tion benefits,  and  the  amount  expended  in  this  way  was 
£276,396.  It  is  noteworthy  that  the  unions  which  have  es- 
tablished this  form  of  benefit  are  among  the  largest  and  the 
strongest  in  the  United  Kingdom,  including  organizations  in 
the  engineering,  building,  ship  building  and  printing  trades. 
About  one-third  of  the  total  number  of  organized  workers  be- 
longing to  registered  unions  is  represented  in  the  group  of 
those  paying  superannuation  benefits. 

The  conditions  for  the  receipt  of  a  superannuation  benefit 
call  for  a  certain  period  of  membership  in  the  union,  varying 
from  ten  to  thirty  years,  inability  to  follow  the  usual  employ- 
ment, and  in  some  cases  a  minimum  age,  varying  from  45  to 
60  years.  Usually  the  beneficiary  is  not  allowed  to  work 
while  in  receipt  of  a  benefit. 

The  superannuation  benefit  is  popular  among  the  trade 
unionists,  but  the  expenditure  for  this  purpose  has  caused 
considerable  financial  embarrassment.  The  increase  of  the 
number  of  pensioners  and  of  the  amount  of  expenditure  have 
imposed  a  growing  burden  upon  the  unions,  which  some  of 
them  have  found  hard  to  bear.  In  the  case  of  the  Amalga- 
mated Society  of  Engineers,  for  example,  the  average  num- 
ber of  members  receiving  superannuation  benefits  amounted 
to  only  1  per  1.000  of  the  total  membership  in  1851 ;  the 
percentage  rapidly  increased  to  9  per  1,000  in  1868;  during 
the  next  ten  years  it  covered  about  10  per  1,000;  in  1879 
it  jumped  to  18  per  1,000;  the  next  year  to  21  per  1.000; 
during  the  following  decade  it  rose  gradually,  reaching  30 
per  1.000  in  1892;  then  it  moved  steadily  to  40  per  1,000 
in  1899;  and  finally  to  47  per  1,000  in  1903.     The  cost  of 


1910.]  HOUSE  — No.  1400.  171 

;  superannuatiou  has  risen  accordingly.  In  1851  the  per  cap- 
ita cost  for  the  year  was  only  21/2^.  (5  cents)  ;  with  the  ex- 
ception of  one  year  it  did  not  reach  5s.  ($1.22)  until  1875; 
after  that  year  the  increase  was  rapid,  and  in  1881  the 
amount  paid  for  superannuation  benefits  was  10s.  2V2d. 
($2.48)  ;  during  the  next  sixteen  years  the  cost  mounted  with 
some  fluctuations  until  in  1897,  the  year  of  the  great  lock- 
out, it  reached  14s.  lll/2d.  ($3.64)  ;  since  that  year  the  in-' 
crease  has  been  very  rapid,  and  in  1903  the  per  capita  su- 
perannuation expenditure  amounted  to  21s.  3d.  ($5.17). 
The  per  capita  expenditure  for  superannuation  benefits  in 
1903  amounted  to  33  per  cent,  of  the  total  expenditure,  and 
to  28  per  cent,  of  the  entire  income  of  the  society. 

The  experience  of  other  unions  paying  superannuation 
benefits  has  been  similar  in  respect  to  the  increase  of  the 
number  of  pensioners  and  the  amount  of  expenditure.  The 
United  Society  of  Boiler  Makers  and  Iron  Ship  Builders  paid 
only  33  cents  per  member  for  superannuation  benefits  in 
1867,  $2.12  in  1903;  the  United  Kingdom  Society  of  Coach 
Makers,  78  cents  per  member  in  1867,  $4.19  in  1903;  the 
London  Society  of  Compositors,  16  cents  in  1877,  $2.85  in 
1903;  the  Steam  Engine  Makers  Society,  85  cents  in  1877, 
$2.31  in  1903.  Concerning  the  adequacy  of  trade  union  su- 
perannuation benefits  as  offering  partial  solution  of  the  prob- 
lem of  old  age  insurance,  Mr.  "Walter  E.  Weyl,  from  whose 
report  on  the  "  Benefit  Features  of  British  Trade  Unions," 
prepared  for  the  United  States  Bureau  of  Labor  in  1906, 
the  foregoing  figures  have  been  taken,  remarks :  "  While  the 
superannuation  benefit  brings  relief  in  certain  cases,  it  does 
not  begin  to  solve  the  problem  of  the  dependence  of  work- 
men in  their  old  age."  ^ 

Information  regarding  the  superannuation  features  of 
American  trade  unions  was  gathered  through  a  circular  of 
inquiry  sent  out  by  this  commission  to  all  national  and  inter- 
national labor  organizations  in  the  United  States.  Sixty- 
nine  replies  were  received.  Of  this  number,  60  organizations 
reported  that  they  had  no  provision  whatever  for  superannii- 

'  ••  Bulletin  of  the  Bureau  of  Labor."  1906,  p.  826. 


172  OLD   AGE   PENSIONS.  [Jan. 

ation  benefits.  Three  societies,  namely,  the  International  Ty- 
pographical Union,  the  Amalgamated  Society  of  Engineers 
and  the  Amalgamated  Society  of  Carpenters  and  Joiners,  re- 
ported the  existence  of  old  age  pension  schemes  in  actual 
operation.  Two  societies,  the  Amalgamated  Association  of 
Street  and  Electric  Eailway  Employees  of  America  and  the 
Pattern  Makers  League  of  North  America,  have  adopted  pen- 
sion schemes  which  will  go  into  operation  when  a  certain 
amount  of  fund  accumulates  under  the  statutes  adopted. 
Another  society,  the  Wood,  Wire  and  Metal  Lathers  Inter- 
national Union,  passed  the  following  vote  at  its  convention 
in  1909:  — 

When  a  member  of  this  organization  has  been  a  continuous  member 
for  fifteen  years,  at  the  age  of  60  years  he  shall  be  entitled  to  a 
benefit  of  $7  per  week,  providing  he  is  unable  to  qualify  as  a  lather 
according  to  our  international  law. 

The  pension  system  will  not,  however,  go  into  effect  for 
some  time.  The  secretary  of  the  organization  explains  that 
the  provisions  of  the  law  are  such  as  to  make  it  certain  that 
there  will  be  no  member  eligible  for  pension  until  the  society 
meets  in  convention  again,  and  during  the  interval  a  report 
will  be  prepared  which  will  propose  some  definite  method  of 
financing  the  pension  system.  Three  other  societies  report 
the  occasional  payment  of  a  benefit  that  might  be  classed  as 
an  old  age  pension,  in  the  form  of  a  sickness  or  disability 
allowance  to  aged  members. 

The  International  Typographical  Union  is  the  first  dis- 
tinctively American  trade  labor  organization  to  institute  an 
old  age  pension  system.  The  Amalgamated  Society  of  En- 
gineers and  the  Amalgamated  Society  of  Carpenters  and 
Joiners  both  have  headquarters  in  England,  with  a  com- 
paratively small  membership  in  this  country.  The  pension 
scheme  of  the  International  Typographical  ITnion  provides 
pensions  for  any  member  of  the  society  who  has  reached  the 
age  of  60  years  and  has  been  in  continuous  good  standing  for 
a  period  of  twenty  years,  and  who  finds  it  impossible  to  se- 
cure sustaining  employment  and  has  no  other  adequate  means 


1910.]  HOUSE  — No.  1400.  173 

of  support.  The  amount  of  the  pension  is  $4  per  week.  Any 
member  earning  $4  or  over  in  anv  one  week  at  the  printing 
trade  forfeits  his  pension  for  that  week.  The  fund  for  the 
payment  of  pensions  is  provided  by  a  tax  of  ^/o  of  1  per  cent, 
on  the  weekly  earnings  of  all  members. 

The  pension  system  was  adopted  by  the  convention  of  1907, 
and  later  was  ratified  by  referendum,  the  vote  standing  17,777 
for  and  9,194  against  the  pension  scheme.  The  scheme  rep- 
resents an  extension  of  the  established  policy  of  this  organiza- 
tion to  make  provision  for  the  partial  support  of  its  aged 
members.  In  carrying  out  this  policy  the  union  had  estab- 
lished in  1894  a  Union  Printers'  Home  at  Colorado  Springs. 
The  pension  system  was  adopted  to  supplement  the  work  of 
the  home  in  providing  for  the  maintenance  of  aged  printers. 
The  committee  that  submitted  to  the  1907  commission  the 
draft  of  the  pension  scheme  afterward  adopted  stated  the  need 
and  the  advantage  of  a  trade  union  pension  system,  as  fol- 
lows :  — 

It  is  incumbent  ujton  the  International  Typographical  Union  to 
devise  some  method  for  caring  for  our  old  and  infirm  members,  who, 
throug-h  their  steadfast  loyalty  and  many  sacrifices  to  the  Interna- 
tional Tj'pographical  Union,  have  made  our  present  organization 
possible,  —  a  plan  that  will  insure  them  against  abject  poverty  and 
public  or  private  charity.  —  a  pension  suitable  to  their  needs.  Such 
a  system  is  in  keeping  with  the  dignity  and  policy  of  the  organization. 
The  recent  eight-hour  struggle  has  left  many  old  men.  who  gave  uu 
the  last  position  they  would  ever  have  for  the  principle  and  honor 
involved;  and  for  these  benefits,  lasting  and  positive  to  the  young 
men,  the  old  men  have  sacrificed  their  all,  thus  placing  the  Interna- 
tional Union  under  a  heavy  mortgage  to  them,  since  without  their  aid 
the  eight-hour  struggle  would  not  have  been  successful.  The  mem- 
bership must  be  cognizant  of  the  fact  that  there  are  many  aged  and 
incapacitated  members  who  are  unable  to  avail  themselves  of  the 
benefits  of  the  Union  Printers'  Home  at  Colorado  Springs,  because 
of  family  ties  and  long  associations  in  their  respective  localities. 
The  committee,  mindful  of  this  condition,  believes  that  an  old  age 
pension  is  a  solution  of  the  question  that  confronts  the  International 
Tyjiographical  Union  in  di.scharging  its  obligation  to  such  members 
as  cannot  take  advantage  of  the  home  and  its  blessings.  Aside  from 
the  sentimental  features  involved,  there  are  at  least  two  other  points 
in  the  old  age  pension  plan  that  should  appeal  to  every  member:  (1) 


174  OLD   AGE    PENSIONS.  [Jan. 

As  an  organizing  factor,  its  value  to  the  International  would  be 
inestimable.  To  the  printer  outside  the  ranks  it  is  sure  to  be  so 
attractive,  once  it  is  established,  that,  instead  of  remaining  outside,  a 
constant  menace,  he  is  sure  to  identify  himself  with  the  union. 
(2)  Because,  as  its  basic  feature,  it  has  a  jjrovision  for  twenty  years' 
continuous  membership,  lapses  for  any  cause  are  sure  to  be  reduced 
to  a  minimum.  The  fact  that  the  International  will  reward  the 
loyalty  of  its  members  by  providing  for  their  declining  years  will 
cause  many  to  consider  well  before  severing  their  connection  with 
the  organization  for  any  of  the  trivial  reasons  which  now  influence 
them. 

The  pension  assessment  went  into  effect  Marcli  31,  1908. 
The  report  of  the  secretary-treasurer  to  the  last  annual  con- 
vention of  the  union,  held  August  9-14,  1909,  at  St.  Joseph, 
Mo.,  shows  that  the  total  receipts  for  the  first  complete  fiscal 
year  of  the  operation  of  the  pension  system,  ending  March 
31,  1909,  were  $229,317.52.  Receipts  from  the  pension  as- 
sessment amounted  to  $201,468.69;  interest,  $1,415.65;  pen- 
sions returned,  $56.  The  total  expenditures  for  pensions 
and  for  administration  during  the  year  amounted  to  $69,- 
550.35,  of  which  the  sum  of  $67,580.00  was  paid  to  pen- 
sioners. The  balance  in  the  fund  May  31,  1909,  was 
$159,767.17. 

The  financial  operation  of  the  system,  as  thus  shown,  has 
been  eminently  satisfactory.  The  preliminary  estimate  had 
calculated  the  returns  from  the  assessment  at  $168,000  per 
year,  and  the  annual  payments  to  pensioners  at  $104,000. 
The  receipts  have  considerably  exceeded  the  estimate,  and  the 
expenditures  have  fallen  far  short.  The  existence  of  the 
large  balance  in  the  treasury  naturally  holds  out  a  tempta- 
tion to  reduce  the  amount  of  the  assessment,  or  to  make  the 
conditions  for  the  receipt  of  a  pension  more  liberal.  In  his 
report  to  the  last  convention,  the  international  president,  Mr. 
James  M.  Lynch,  opposed  any  such  action,  and  advocated  a 
maintenance  of  the  present  conservative  policy  in  the  ad- 
ministration of  the  pension  fund. 

The  number  of  applications  for  pensions  received  up  to 
May  31,  1909,  was  647,  of  which  48  were  disapproved,  1 
was  withdrawn,  580  were  approved,  and  18  are  still  under 


1910.]  HOUSE  — No.  1400.  175 

consideration.  Thirty-eight  pensioners  had  died,  leaving  542 
pensioners  on  the  roll.  Analysis  of  the  ages  of  the  pension 
applicants  brings  out  the  fact  that  the  average  age  of  the  647 
is  69.6  years.  Of  the  total  number,  62.5  per  cent,  were  be- 
tween 60  and  70  years,  33  per  cent,  were  between  70  and  80, 
4.1  per  cent,  between  80  and  90,  and  1  over  90. 

The  main  facts  regarding  the  pension  systems  of  the  Amal- 
gamated Society  of  Engineers  and  the  Amalgamated  So- 
ciety of  Carpenters  and  Joiners  are  compactly  stated  in  the 
:N'ew  York  "  Labor  Bulletin  "  for  December,  1908,  as  fol- 
lows :  — 

While  the  International  Typographical  Union  i^ermits  the  pay- 
ment of  $4  per  week,  or  $208  per  year,  to  each  of  its  pensioners, 
who  at  present  represent  1  per  cent,  of  the  membership,  the  rules 
of  the  Amalgamated  Society  of  Engineers  provide  that  in  the 
United  States  any  member  55  years  of  age  who  has  been  twenty- 
five  years  successively  in  the  society,  and  who,  through  old  age  or 
infirmity,  cannot  obtain  the  ordinary  rate  of  wages,  or  who  is  unable 
to  follow  his  usual  occupation,  is  entitled  to  a  superannuation  benefit 
of  $2.10  per  week;  if  thirty  years  a  member.  $2.40;  if  thirty-five 
years.  $2.70;  if  forty  years  or  upward,  $3.  For  fifty-eight  years 
this  society  has  been  paying  old  age  pensions  to  its  members,  and  in 
that  time  it  has  disbursed  for  that  purpose  throughout  its  jurisdic- 
tion $9,957,881,  At  present  it  distributes  $645,297  annually  among 
its  5,598  aged  members.  This  figure  represents  5  per  cent,  of  its  total 
membership  (110,084),  and  the  yearly  payment  per  capita  is  $115.28. 
In  its  American  council  the  societj"^  has  2,821  members,  210  (7.4  per 
cent.)  of  whom  are  at  present  enjoying  pensions.  The  "Amalga- 
mated Engineers'  Monthly  Journal  "  for  December,  1908,  issued  in 
London,  Eng.,  comments  thus  upon  the  question  of  superannuation 
benefits : — 

\Vliile  there  is  probably  no  other  benefit  to  which,  and  for  which,  the 
members  more  cheerfully  pay,  yet  it  is  well  to  keep  in  view  the  problem 
of  superannuation  as  it  grows  from  year  to  year.  When  it  is  noted 
that  of  the  Is.  6d.  (36  cents)  per  week  contributions,  7d.  (14  cents)  is 
due  for  payment  of  current  superannuation  benefit,  without  in  any  way 
augmenting  the  superannuation  fund  for  future  benefits  of  present 
payers,  the  growing  seriousness  of  the  said  benefit  is  apparent,  and  it 
will  be  a  problem  to  be  discussed  in  the  not  far  distant  future,  how  the 
inauguration  and  extension  of  State  old  age  pensions  shall  insure  some 
relief  to  the  society  from  the  burden  of  superannuation  expenditure,  as 
well  as  augmenting  the  income  of  the  recipients  of  that  benefit. 


176  OLD   AGE   PENSIONS.  [Jan. 

The  by-laws  of  the  Amalgamated  Society  of  Carpenters  and 
Joiners  i)rovide  that  any  good-standing  member  in  the  United  States 
district  who  is  50  years  of  age,  and  incapable  of  earning  the  usual 
amount  of  wages  in  the  locality  in  which  he  is  employed,  if  he  has 
been  twenty-five  years  successively  in  the  society,  shall  be  allowed 
$2.80  per  week  for  life ;  and  any  carpenter  of  the  same  age  who  has 
been  continuously  a  member  for  eighteen  years  shall  receive  $2.45 
per  week  for  Hfe.  After  a  member  has  been  placed  on  the  super- 
annuation list  he  cannot,  however,  receive  the  benefit  if  earning  more 
than  half  the  rate  of  wages.  Under  the  rules,  a  member  who  is  more 
than  50  years  of  age,  if  he  continues  to  labor  at  carpentry,  and  is  not 
able  to  obtain  the  prevailing  wage-rate,  is  permitted  to  work  at  a 
reduced  rate.  This  society  pays  out  yearly  $210,841  to  2,172  super- 
annuated members  (3  per  cent,  of  a  total  membership  of  68,735),  the 
average  disbursement  annually  per  pensioner  being  $97.07.  The 
aggregate  expenditure  for  superannuation  benefits  in  the  past  forty- 
one  years  was  $1,822,417.  In  the  United  States  district  there  are 
5,673  members,  57  (1  per  cent.)  of  whom  are  in  receipt  of  old  age 
pensions. 

The  pension  system  of  the  Amalgamated  Association  of 
Street  and  Electric  Kailway  Employees  is  to  go  into  force 
when  a  fund  accumulated  by  a  tax  of  6  cents  per  month  on 
each  member  to  meet  death  and  disability  claims  reaches  the 
amount  of  $10,000.  When  the  system  becomes  operative, 
any  member  of  seven  to  ten  years'  standing  who  has  reached 
the  age  of  65  and  is  incapacitated  for  work  shall  receive  an 
allowance  of  $1  per  week,  payable  monthly.  For  members 
of  ten  to  fifteen  years'  standing  the  allowance  is  $1.50  per 
week;  for  members  of  fifteen  to  twenty  years'  standing,  $3 
per  week ;  and  for  members  of  twenty-five  years'  standing, 
$3  per  week. 

The  pension  scheme  of  the  Pattern  Makers'  League  of 
North  America  will  go  into  effect  in  1920.  Th'>«  scheme, 
which  was  adopted  in  1900,  provides  that  a  fund  for  super- 
annuation benefits  shall  be  established  by  setting  aside  2 
cents  of  the  "  per  capita  "  tax  of  the  League  for  the  period  of 
twenty  years.  All  members  of  the  League  in  good  standing 
July  1,  1900,  and  continuously  members  until  July  1,  1920, 
who  are  over  60  years  of  age,  are  to  receive  superannuation 
allowances.     The  amount  of  the  allowance  is  $12  per  month 


1910.]  HOUSE  — No.  1400.  177 

for  members  60  years  of  age  and  twenty-five  years'  member- 
ship, and  $16  per  month  for  members  65  years  of  age  and 
thirty  years'  membership. 

The  subject  of  old  age  pensions  was  given  extended  con- 
sideration at  the  annual  convention  of  the  American  Federa- 
tion of  Labor,  in  Denver,  N'ovember,  1908.  The  executive 
committee  reported  on  pension  systems  in  operation  in  vari- 
ous countries,  and  the  committee  on  resolutions,  to  which  this 
report  was  referred,  recommended  the  following  resolution, 
which  was  adopted  by  the  convention :  — 

We  would,  therefore,  recommend  that  the  executive  council  be 
authorized  to  secure  the  assistance  of  such  competent  legal  advice  as 
will  enable  them  to  prepare  the  draft  of  a  bill  providing  for  old  age 
pensions,  and  that  such  bill  be  introduced  either  in  the  Legislatures  of 
the  States,  or  in  Congress,  theii-  action  in  this  being  governed  by 
their  decision  as  to  whether  this  legislation  is  to  be  most  readily 
secured  and  applied  through  the  individual  action  of  the  several 
States,  or  by  federal  legislation,  or  by  both. 

At  the  convention  held  the  following  year,  1909,  in  To- 
ronto, Can.,  the  executive  council  reported  a  draft  of  a  bill 
prepared  by  Congressman  W.  B.  Wilson,  a  delegate  to  the 
convention,  providing  for  the  establishment  of  5-  national  pen- 
sion system  through  the  organization  of  "  The  Old  Age  Home 
Guard  "  of  the  United  States  army.  According  to  the  pro- 
visions of  the  bill,  the  proposed  guard  would  be  composed 
of  persons  not  less  than  65  years  of  age,  who  had  been  resi- 
dents of  the  United  States  for  twenty-five  consecutive  years 
and  citizens  for  fifteen  consecutive  years,  and  who  were  not 
possessed  of  property  amounting  to  more  than  $1,500  or  of 
an  income  exceeding  $240  per  year.  Persons  enrolled  in  the 
guard  would  draw  pay  at  the  rate  of  $120  per  year  in 
quarterly  instalments,  "  as  pensions  are  now  paid."  The 
committee  on  resolutions,  to  which  the  subject  was  referred, 
recommended  endorsement  of  the  principle  of  old  age  pen- 
sions and  of  the  bill  submitted.  The  recommendation  of  the 
committee  was  adopted  by  the  convention. 


178  OLD   AGE   PENSIONS.  [Jan. 

9.     Industrial  Insurance. 

Industrial  insurance  has  been  defined  by  the  Hon.  John 
F.  Dryden,  president  of  the  Prudential  Insurance  Company 
of  America,  the  first  company  to  offer  this  form  of  insurance 
in  the  United  States,  as  "  life  insurance  for  small  amounts, 
chiefly  on  the  lives  of  wage  earners  and  members  of  their 
immediate  families,  with  premiums  payable  weekly  and  col- 
lected frOm  the  houses  of  the  insured."  The  distinguishing 
features  of  industrial  insurance,  as  thus  defined,  may  be 
stated  to  be :  first,  the  policies  are  for  small  amounts,  —  a 
hundred  dollars,  more  or  less,  —  as  compared  with  the  poli- 
cies of  larger  amounts,  —  thousands  of  dollars,  —  in  ordinary 
insurance ;  second,  the  premiums  are  payable  weekly,  instead 
of  annually,  semi-anuually  or  quarterly,  as  in  the  case  of  or- 
dinary insurance ;  third,  the  premiums  are  collected  from 
house  to  house  hj  agents,  instead  of  being  remitted  to  the  of- 
fice of  the  company,  as  in  the  case  of  ordinary  insurance ; 
fourth,  a  further  peculiarity  of  industrial  insurance  is  that 
the  weekly  premiums  are  fixed  at  3  cents,  5  cents,  10  cents, 
15  cents  and  so  on,  in  multiples  of  5  cents,  for  convenience 
of  payment,  and  the  amount  of  insurance  is  adjusted  accord- 
ingly. In  ordinary  insurance  the  premium  rate  is  adjusted 
to  the  amount  of  insurance,  the  latter  being  taken  as  the  unit 
or  base  of  calculation;  that  is,  the  rate  is  so  much  per  $1,000 
of  insurance,  taken  at  diiferent  ages.  In  industrial  insur- 
ance the  amount  of  insurance  is  adjusted  to  the  rate  of  pre- 
mium, the  latter  being  taken  as  the  unit  or  base  of  calcula- 
tion ;  that  is,  the  amount  of  insurance  is  so  much  per  weekly 
premium  of  3  cents,  5  cents,  10  cents,  15  cents,  and  so  on, 
at  the  different  ages. 

The  beginning  of  industrial  insurance  may  be  traced  back 
to  the  year  1854,  when  the  Prudential  of  London,  which  had 
been  organized  in  1848  as  an  ordinary  life  insurance  com- 
pany, began  to  issue  industrial  insurance  for  wage  earners. 
Many  of  the  friendly  societies  of  Great  Britain,  which  had 
been  supplying  insurance  for  members  of  the  working  and 
middle  classes,  were  at  this  time  in  a  condition  of  insolvency. 


1910.1 


HOUSE  — No.  1400. 


179 


Their  rates  had  not  heen  adjusted  on  a  proper  actuarial  basis, 
and  they  had  consequently  become  involved  in  financial  dif- 
ficulties, which  had  brought  fraternal  insurance  into  general 
disrepute.  Industrial  insurance  was  instituted  as  a  plan  for 
meeting  the  need  of  life  insurance  in  small  amounts,  supplied 
by  scientific  and  secure  methods.  In  the  United  States  this 
form  of  insurance  was  first  offered  by  the  Prudential  In- 
surance Company.  The  growth  of  industrial  insurance  has 
been  rapid  and  steady.  On  the  first  of  January,  1909,  there 
were  about  20,000,000  of  industrial  policies  in  force  in  this 
country,  representing  insurance  to  the  amount  of  over  $2,- 
600,000,000. 

Industrial  insurance  companies  have  in  the  past  provided 
onlv  for  straight  life,  and  in  some  cases  for  endowment,  insur- 
ance.  They  have  not  until  very  recently  attempted  to  deal 
with  the  problem  of  furnishing  insurance  against  old  age. 
AVithin  the  last  two  years,  however,  the  two  largest  com- 
panies —  the  Prudential  and  the  Metropolitan  —  have  be- 
gun to  ofl^er  new  classes  of  policies,  specifically  designed  to 
meet  the  need  of  old  age  insurance  for  working  people. 

For  straight  life  industrial  insurance  the  rates  generally 
in  force  prior  to  1909  are  illustrated  by  the  following  table : — • 


T. 

^BLE 

OF 

Adult  R.\tes. 

Benefits  payable  for  the  Following  Weekly  Premiums. 

Age  Xext 
Birthday. 

e 

e 

6 

6 

3 

6 

c 

6 

g 

1 

i 

c 
O 

c 

6 

6 

S2 

S  S 

o 

o 
« 

lO 

s 

to 

O 
lO 

o 

lO 

20 

$95 

.5190 

$285 

$380 

$475 

$570 

$665 

$760 

$855 

- 

- 

- 

- 

25 

81 

162 

243 

324 

405 

486 

567 

648 

729 

$810 

- 

- 

- 

30 

71 

142 

213 

284 

355 

426 

497 

568 

639 

710 

$781 

- 

- 

35 

61 

122 

183 

244 

305 

366 

427 

488 

549 

610 

671 

- 

- 

40 

51 

102 

153 

204 

255 

306 

357 

408 

459 

510 

561 

$612 

- 

45 

42 

84 

126 

168 

210 

252 

294 

336 

378 

420 

462 

504 

- 

50 

34 

68 

102 

136 

170 

204 

238 

272 

306 

340 

374 

408 

$442 

111  1909  the  Prudential  and  the  ]\retropolitan  adopted  a 
new  table  of  reduced  rates,  or  increased  the  amounts  of  in- 


180 


OLD   AGE   PENSIONS. 


[Jan. 


surance  offered  for  the  fixed  weekly  premium,  as  shown  in 


the  following  table 


New  Rates  of    the   Prudential  and  the  Metropolitan,   1909. 
(Premiums  cease  at  Age  75). 


Age 

Amount  of  Insurance  for  Weekly  Premium  of  — 

Next 
Birth- 
day. 

d 
O 

g 

US 

c 

S 

o 

1 
o 

-2 
s 

6 

o 

c 

O 

c 

OP 

o 
o 
m 

4 

1 

a; 
O 
O 

c 
O 
to 

c 

6 

o 

IS 

a 
o 

IS 

a 

S 

a 

6 

U3 

g 
o 

20, 

$63 

$105 

$210 

$315 

$420 

$525 

$630 

$735 

- 

- 

- 

- 

- 

- 

25. 

54 

90 

180 

270 

360 

450 

540 

630 

$720 

$810 

$900 

- 

- 

- 

- 

30, 

47 

79 

158 

237 

316 

395 

474 

553 

632 

711 

790 

$869 

$948 

- 

- 

35, 

41 

68 

136 

204 

272 

340 

408 

476 

544 

612 

680 

748 

816 

- 

- 

40, 

34 

57 

114 

171 

228 

285 

342 

399 

456 

513 

570 

627 

684 

- 

- 

45. 

28 

47 

94 

141 

188 

235 

282 

329 

376 

423 

470 

517 

564 

$611 

$658 

50, 

23 

38 

76 

114 

152 

190 

228 

266 

304 

342 

380 

418 

456 

494 

532 

The  Prudential  also  offers  $500  policies  on  the  weekly 
payment  plan,  at  rates  as  follows :  — 


$500  Policies. 


Age  Next  Birthday. 


20. 
25. 
30, 
35, 


Weekly 
Premium. 


$0  24 
28 
32 
37 


Age  Next  Birthday. 


Weekly 
Premium. 


40, 
45, 

50, 


44 
53 
66 


Another  form  of  policy  offered  by  the  Prudential  is  a 
twenty-year  endowment,  —  payable,  that  is,  at  the  end  of 
twenty  years  or  at  previous  death,  —  with  rates  as  follows  :  — 


1910.] 


HOUSE  — No.  1400. 


181 


Twenty-year  Endoavment  Table,  Prudential. 


Amount  of  Endowment  Insxjrance  for  Weekly  Premium  of  — 

Age  Next 
Birthday. 

e 

S 

B 

o 

g 
o 

■o 

c 

e 
O 

10 

e 

s 

S 

c 

6 

lO 
CO 

1 

o 

s 

IS 

S 

c 

0) 

O 

20,   . 

25,  .   .   . 
30.  .   .   . 
35.  .   .   . 

40,   .    .    . 
45,   . 
50,   . 

$43 
42 
41 
40 

38 
36 
32 

$86 
84 
82 
80 
76 
72 
64 

$129 
126 
123 
120 
114 
108 
96 

$172 
168 
164 
160 
152 
144 
128 

$215 
210 
205 
200 
190 
180 
160 

$258 
252 
246 
240 
228 
216 
192 

$301 
294 
287 
280 
266 
252 
224 

$344 
336 
328 
320 
304 
288 
256 

$387 
378 
369 
360 
342 
324 
288 

$430 
420 
410 
400 
380 
360 
300 

The  John  Hancock  offers  similar  special  policies,  as  fol- 
lows :  • — ■ 


Special  Whole  Life  Policies  for  S250,  John  Hancock. 


Age  Next  Birthday. 


Weekly 
Premium. 


20, 
25, 
30, 
35, 


40, 
45, 


$0  14 
16 

19  50, 

22  55, 


Age  Next  Birthday. 


Weekly 
Premium. 


$0  26 
31 
38 
4S 


TWKXTY-YEAR    PaYMEXT   T.IFE    POLICIES   FOR   $2.^0. 


The  foregoing  classes  of  policies  are  all  life  or  endowment 
insnrance.  The  new  policies  providing  old  age  insurance 
are  offered,  so  far  as  known,  by  the  Metropolitan  and  the 
Prudential. 


182  OLD   AGE   PENSIONS.  [Jan. 

The  Metropolitan  began  in  1909  to  issue,  through  its  in- 
dustrial department,  a  combined  insurance  and  annuity  pol- 
icy on  the  weekly  payment  basis,  which  oiTers  an  opportunity 
for  insurance  against  old  age.  This  policy  is  for  amounts  of 
$100  and  multiples,  the  insurance  holding  throughout  life, 
the  premiums  ceasing  at  the  age  65,  when  an  annuity  of 
$100  begins.  That  is,  under  this  plan  the  policy  holder 
pays  premiums  until  he  reaches  the  age  65;  his  insurance 
then  continues  during  the  remainder  of  his  life,  and,  in  addi- 
tion, he  receives  an  annuity  of  $100,  or  a  multiple  amount, 
for  the  rest  of  his  life.  If,  at  the  date  of  death  of  the  in- 
sured, any  instalments  of  the  annuity  for  the  current  year 
remain  unpaid,  the  amount  is  paid  in  addition  to  the  insur- 
ance on  his  life.  This  new  policy  was  designed,  as  stated  in 
the  circular  explaining  its  provisions,  to  meet  the  demand 
for  annuities  created  by  the  institution  of  savings  bank  in- 
surance in  Massachusetts.  In  the  circular,  Mr,  Haley  Fiske, 
vice-president  of  the  Metropolitan,  states :  — 

Insurance  companies  in  this  country  have  hitherto  failed  to  find 
any  considerable  demand  on  the  part  of  the  insuring  public  for 
annuities.  In  our  ordinary  department  we  publish  annuity  tables 
the  same  as  the  other  companies  do,  but  our  experience,  like  that  of 
the  other  companies,  has  been  that  few  are  called  for.  Those  who 
have  charge  of  the  prosecution  of  the  system  of  so-called  savings 
bank  insurance  in  Massachusetts  have  made  a  great  deal  of  their 
annuity  policies.  ...  It  would  apjDear  that  some  demand  for  annui- 
ties has  been  created  by  the  agitation  in  Massachusetts. 

The  rates  for  the  combined  insurance  and  annuity  policy 
are  shown  in  the  following  table :  — ■ 


1910.] 


HOUSE  — No.  1400. 


183 


$100  Life  Insurance  and  $100  Annuity. 

Insurance  continues  during  whole  of  life,  but  is  free  of  premiums 
after  age  65,  at  which  time  annuity  commences. 

Industrial. 


Age. 


Weekly 
Premium. 


20, 
25, 
30. 
35, 


10  13 
16 
21 
27 


Age. 


40, 
45, 
50, 


Weekly 
Premium. 


$0  37 
53 

82 


This  policy  offers  cash  surrender,  paid  up  and  extended 
insurance  features.  For  example,  at  age  30  a  policy  that  has 
been  eight  years  in  force  is  entitled  to  $112  paid  up  policy,  or 
$12  more  than  the  face  value  of  the  insurance  benefit  provided 
by  the  original  policy.  Again,  a  policy  at  age  30,  twenty 
vears  in  force,  is  entitled  to  a  cash  surrender  value  of  $179. 
The  extended  insurance  values  which  provide  for  continuance 
of  insurance  to  the  amount  of  the  original  policy  for  a  cer- 
tain period  of  years  are  in  proportion  to  the  number  of  years 
for  which  premiums  have  been  paid. 

The  Metropolitan  also  began  at  the  same  time  to  issue  com- 
bined insurance  and  annuity  policies  through  its  interme- 
diate branch.  These  policies  are  offered  at  more  favorable 
rates  than  the  insurance  and  annuity  policies  in  the  industrial 
department.  They  are  not,  however,  on  the  weekly  payment 
basis,  the  premiums  being  payable  quarterly,  semi-annually 
and  annually.  They  are  offered,  however,  as  suitable  for 
workingmen  who  can  pay  their  premiums  at  longer  intervals, 
and  without  house-to-house  collection.  Strictly  speaking, 
therefore,  these  policies  are  not  in  the  class  of  industrial 
insurance  proper. 

Two  kinds  of  policy  are  offered.  The  first  is  a  $500  term 
insurance,  plus  $100  annuity  policy.  The  insurance  is  pay- 
able to  the  amount  of  $500,  if  death  occur  prior  to  the  age  G5  ; 
$400,  if  death  occur  between  the  ages  65  and  G6 ;  $300,  if 
death  occur  between  the  ages  66  and  67;  $200,  if  death  occur 
between  the  ages  67  and  68 ;  $100,  if  death  occur  between  the 


184 


OLD   AGE   PENSIONS. 


[Jan. 


ages  of  68  and  69 ;  no  insurance  thereafter.  The  annuity  of 
$100  is  payable  at  the  age  65,  and  annually  thereafter.  Pre- 
miums cease  at  the  age  65.  The  rates  are  shown  in  the 
following  table :  — 

$500  Term  Insurance  Plus  $100  Annuity. 
Intermediate. 


Age  Next  Birthdat. 


Annual. 


Premiums 
Semi-annual. 


Quarterly. 


20, 
25, 
30, 
35, 
40, 
45, 
50, 


Sn  10 
13  28 
16  24 
20  35 
26  26 
35  29 
50  47 


$5  63 
6  74 
8  24 
10  33 
13  33 
17  91 
25  61 


$2  84 

3  39 

4  15 

5  20 

6  71 
9  02 

12  90 


The  other  policy  is  a  $500  life  insurance  plus  $100  an- 
nuity. The  insurance  continues  during  life,  but  is  free  of 
premiums  after  the  age  65,  and  at  that  age  the  annuity  begins. 
The  rates  are  as  follows :  — 


$500  Life  Insurance  Plus  $100  Annuity. 
Intermediate. 


Age. 


Annual. 


Premiums 
Semi-annual. 


Quarterly. 


20, 
25. 
30, 
35, 
40, 
45, 
50, 


$12  66 
15  31 
18  93 
24  01 
31  40 
42  85 
62  44 


$6  42 
7  77 
9  61 
12  19 
15  94 
21  75 
31  69 


$3  24 

3  91 

4  84 
6  14 
8  03 

10  95 
15  96 


The  Metropolitan  has  also  begun  recently  to  issue  a  new 
convertible  life  policy.  The  peculiar  features  of  this  policy 
are :  first,  that  after  the  holder  has  paid  premiums  for  a 
certain  number  of  years,  the  policy  becomes  a  free  policy, 
payable  at  death,  requiring  no  further  payment  of  jiremiums ; 


1910.] 


HOUSE  — No.  1400. 


185 


and  second,  that  if  the  holder  elects  to  continue  to  pay  pre- 
miums for  an  additional  period,  the  policy  is  converted  into 
an  endowment  policy  at  age  70,  and,  after  further  intervals 
of  premium  payment,  into  endowment  policies  at  ages  65,  60, 
55,  50,  45  and  40,  successively.  The  nature  of  this  policy 
may  be  shown  by  a  concrete  illustration  for  a  person  taking 
out  such  a  policy  at  age  30.  A  policy  for  $200  can  be  taken 
at  that  age  for  a  weekly  premium  of  25  cents,  the  premium 
being  payable  for  eleven  years  and  twenty-three  weeks.  At 
the  end  of  that  period  the  policy  holder  may  take  a  paid  up 
policy  for  the  face  value  of  the  original  policy,  or,  if  he 
wishes  to  pay  premiums  for  thirty-five  weeks  longer,  he  may 
thereby  convert  his  policy  into  an  endowment  policy  at  age  70. 
If  at  the  end  of  the  thirty-five  weeks  he  chooses  to  continue 
the  policy,  paying  premiums  for  forty  weeks  longer,  he  may 
thereby  convert  the  policy  into  an  endowment  policy  at 
age  65. 

The  rates  for  this  policy  are  as  follows :  — 

New  Convertible  Policy,  Metropolitan. 


s 
n 


a 

o 


10, 
15, 
20, 
25, 
30, 
35, 
40, 
45. 
50, 


3 


if 


$250 
250 
250 
250 
200 
200 
150 
150 
150 


p.  2 


.£.  >, 
— -  a>  © 


2      E 

£  S  ?3  2 


Yrs.  Wks. 

8  20 

9  47 
11  38 
13  30 
11  23 

13  0 

10  4 

11  37 

14  12 


Additional  Successive  Periods  during  which  Premiums  are  re- 
quired AFTER  THIS  PoLICY  SH.\LL  HAVE  BECOME  A  FrEE  PoLICY 
PAYABLE  AT  DeATH,  TO  CONVERT  IT  INTO  A  FULLY  PAID  UP  ENDOW- 
MENT FOR  A  Like  Sum,  payable  when  the  Lnsured  reaches  the 
Corresponding  Age  specified  Below,  or  at  Prior  Death. 


la- 


E  o 

aS  . 
t-     to 

O   «< 

"if- 


aS  . 

-.Ed 
t^      CO 

o  «•< 


>  ^ 
^  .5U3 


c>0 


CJ 


if- 


Yrs.  Wks, 


0  39 

0  35 

0  50 

0  42 

1  11 

2  13 


Yrs.  Wks. 

Yrs.  Wks. 

0  32 

0  27 

0  43 

0  35 

1   7 

0  49 

0  43 

1  18 

0  40 

1  12 

1   5 

1  44 

0  48 

1  23 

1  26 

Yrs.  Wks, 
0    39 


c  P 
E  = 


a- 


C    V< 
"if- 


Yrs.  Wks 
1      3 

1  23 

2  7 


■S  a 


o  a>-< 
"if- 


Yrs.  Wks. 
1    25 


c4   C 

E  o 


c        ^ 
c  o  •< 

"if- 


Yrs.  Wks. 
2      2 


186 


OLD   AGE   PENSIONS. 


[Jan, 


The  Prudential  has  offered  since  1908  a  policy  that  should 
be  mentioned  here,  although  it  does  not  belong  in  the  class  of 
industrial  insurance  proper,  as  it  is  not  a  weekly  payment 
policy.  This  is  the  so-called  monthly  income  policy.  It  is 
described  by  President  Dryden  as  a  "  method  of  providing 
with  certainty  for  dependent  old  age."  The  policy  provides 
for  survivors  of  the  insured  a  monthly  income  for  a  period  of 
twenty  years,  or,  in  case  of  ah  endowment  policy,  a  monthly 
income  for  the  insured  during  the  remainder  of  life ;  that  is, 
under  this  plan,  instead  of  buying  the  amount  of  insurance 
in  one  sum  at  the  death  of  the  insured,  or  on  the  maturity  of 
the  policy,  a  monthly  sum  of  $10  or  multiples  of  that  amount 
is  paid  for  a  period  of  twenty  years.  The  rates  are  as  fol- 
lows :  — 

Monthly  Income  Policy. 


Age. 


Wiiole 
Life. 

Ten- 
payment 
Life. 

Fifteen- 
payment 

Twenty- 
payment 
Life. 

Ten- 
year 
Endow- 
ment. 

Fifteen- 
year 

Endow- 
ment. 

$26  24 

S64  63 

S47  83 

$39  64 

$161  00 

$102  03 

29  41 

70  16 

51  99 

43  13 

161  44 

102  56 

33  47 

76  81 

57  01 

47  39 

162  05 

103  28 

38  76 

84  77 

63  07 

52  62 

162  95 

104  38 

45  76 

94  38 

70  53 

59  16 

164  33 

106  15 

55  20 

106  01 

79  82 

67  62 

166  67 

109  24 

68  11 

120  32 

91  77 

78  91 

170  80 

114  64 

85  91 

137  97 

107  36 

94  38 

177  87 

123  78 

110  64 

160  16 

128  41 

116  24 

189  62 

138  99 

Twenty- 
year 
Endow- 
ment. 


20, 
25, 
30, 
35, 
40, 
45, 
50, 
55, 
60, 


$73  28 

73  90 

74  77 
76  16 
78  46 
82  46 
89  35 

100  87 
119  55 


Industrial  insurance  has  been  severelv  criticised.  The 
brunt  of  the  criticism  is  directed  at  the  cost,  which  is  de- 
clared to  be  exorbitantly  high.  The  rates  are  in  general 
about  double  those  for  ordinary  life  insurance.  The  man- 
agers of  the  industrial  insurance  companies  defend  the  high 
rates  on  the  ground  of  the  great  expense  of  administering 
this  form  of  insurance.  It  is  described  as  "  insurance  at  re- 
tail," and  the  expenses  of  any  retail  business,  and  conse- 
quently the  prices,  are  declared  to  be  necessarily  and  legiti- 
mately higher  than  those  of  wholesale  business.     Especial 


1910.J  HOUSE  — No.  1400.  187 

emphasis  is  laid  upou  the  necessity  of  large  expenditure  for 
solicitation  of  business  and  collection  of  premiums.  This  is 
held  to  be  necessary  in  order  to  bring  the  insurance  to  the 
attention  of  wage  earners,  and  to  induce  them  to  keep  their 
insurance  in  force.  Attempts  to  do  away  with  agents  for  so- 
licitation and  collection  are  said  to  be  hopeless.  The  govern- 
ment system  of  post  office  life  insurance  in  Great  Britain, 
for  example,  which  was  desigiied  to  furnish  insurance  to 
working  people  without  the  expense  of  agents,  is  cited  as  illus- 
trating the  unavoidable  failure  of  any  such  attempts.  In 
fortv  vears  the  government  has  issued  onlv  about  the  same 
number  of  policies  that  the  London  Prudential  issues  in  ten 
days.  If  industrial  insurance  is  to  be  a  success,  it  is  argued 
that  agents  must  be  employed  for  purpose  of  solicitation  and 
collection,  and  the  cost,  of  course,  must  be  borne  by  the  in- 
sured. Finallv,  it  is  contended  that  the  hioher  mortality 
rate  among  workers  than  in  the  population  at  large  necessi- 
tates and  justifies  the  comparatively  high  rates  charged  for 
industrial  insurance.  The  general  death  rate,  for  example, 
at  the  ages  25  to  44,  is  for  clergymen  only  6.2,  while  for 
laborers  it  is  13.0,  for  cigarmakers  14.6.  The  chief  reasons 
for  the  higher  rates  of  industrial  insurance  have  been  thus 
forcefully  stated  bv  President  John  F.  Dryden  of  the  Pru- 
dentiaP :  — 

Industrial  insurance  is  life  insurance  at  retail,  and  for  this  reason, 
in  part  at  least,  the  cost  is  higher  than  in  ordinary  life  insurance, 
where  the  premiums  are  payable  quarterly,  semi-annually  or  annually, 
and  required  to  be  sent  to  the  office  of  the  company.  Just  as  retail 
prices  are  higher  than  wholesale  prices,  so  the  cost  of  a  commodity  is 
enhanced  by  additional  privilegres  of  accommodation,  such  as  are 
represented  in  the  collection  of  the  weekly  premium  fi-ora  the  houses 
of  the  insured.  This  accommodation  is  of  great  value,  and  necessarily 
requires  to  be  paid  for.  Wage  earners,  for  self-evident  reasons,  con- 
form their  scale  of  living  and  family  expenditures  to  the  weekly  prin- 
ciple, because  the  income  is  also  upon  that  basis.  It  is  a  convenience 
to  the  working  man  to  have  the  insurance  collector  call  at  his  house 
for  the  premium,   and  for  that  convenience  he  is  willing  to  pay. 

'  "Industrial  Insurance;"  .statement  made  to  a  select  committee  of  the  New  Jersey 
Senate,  by  John  F.  Dryden,  president,  the  Prudential  Insurance  Company  of  America, 
July  19,  1906,  pp.  30,  31. 


188  OLD   AGE   PENSIONS.  [Jan. 

Efforts  which  have  been  made  to  dispense  with  collectoi's  have  in- 
variably proved  a  faihire.  Considering  the  accommodation,  in  addi- 
tion to  the  insurance  protection,  industrial  insurance  is,  without 
question,  one  of  the  cheapest  of  commodities.  It  would  be  impossible 
to  give  as  much  for  the  money,  —  as  much  convenience  and  accommo- 
dation to  circumstances  on  the  one  hand,  and  as  much  life  insurance 
protection  on  the  other,  —  were  it  not  that  the  business  is  one  of 
millions  of  small  transactions,  and  concentrated  upon  a  comparatively 
small  area.  The  fact  of  special  accommodation  in  the  collection  of 
the  premiums  is  at  least  one  of  the  reasons  why  industrial  insurance  is 
more  expensive  than  life  insurance  on  the  ordinaiy  jDlan.  .  .  . 

No  fair  comparison  can  be  made,  therefore,  of  the  premium  charges 
for  industrial  insurance  with  the  rates  of  ordinary  companies,  because 
at  the  outset  the  conditions  are  not  similar,  —  the  special  accommo- 
dation in  the  one  is  wanting  in  the  other ;  but  chiefly  because  the  class 
of  people  insured,  primarily  wage  earners,  are  employed  in  industries 
more  or  less  subject  to  a  higher  accident,  sickness  or  mortality  rate. 
Upon  the  basis  of  our  industrial  experience,  we  know  that  the  mor- 
tality rate  of  industrial  joolicy  holders  is  not  far  from  being  double 
the  rate  prevailing  among  ordinary  policy  holders.  The  reason  for 
this  higher  mortality'  is  readily  ascertained  upon  careful  inquiry  into 
the  facts.  It  is  in  part  due  to  the  conditions  of  life,  occuioation, 
environment,  and  various  other  elements  which  determine  the  duration 
of  human  existence.  The  more  favorable  mortality  of  ordinary  policy 
holders  is,  in  a  large  majority  of  cases,  the  result  of  a  more  careful 
medical  selection  than  Avould  be  applicable  or  possible  in  the  trans- 
action of  the  business  of  industrial  insurance.  A  very  considerable 
proportion  of  those  Avho  are  jjoliey  holders  in  industrial  companies 
would  not  be  accepted  by  ordinary  life  companies,  because  of  nativity, 
occupation,  residence,  etc.  In  other  words,  in  its  final  analysis,  the 
Ijroblem  is  one  of  safe  insurance  on  the  industrial  plan,  applicable  to 
the  mass  of  the  population,  and  of  reasonable  cost,  or  the  alternative 
of  no  insurance  at  all. 

In  this  connection,  the  fact  may  be  noted  that  an  insur- 
ance company  was  chartered  by  the  Legislature  of  Massachu- 
setts in  1907,  and  is  now  in  process  of  organization,  which 
proposes,  by  a  sale  of  insurance  "  over  the  counter,"  to  elimi- 
nate many  expenses  of  insurance  incurred  through  the  pres- 
ent methods  of  solicitation  and  collection,  and  thus  to  reduce 
the  cost  to  the  insured.  The  incorporators  of  this  company, 
which  is  called  the  Mutual  Direct  Life  Assurance  Society  of 
Boston,  have  advanced  the  plan  with  a  view  to  the  public  in- 
terest, in  the  belief  that  the  present  expense  of  insurance  can 


1910.]  HOUSE  — No.  1400.  189 

be  materially  reduced.  The  charter  provides  that  the  society- 
shall  have  a  paid  up  capital  of  $200,000,  and  a  paid  in  sur- 
plus of  $100,000,  the  latter  to  be  retired  first,  and  both  to 
be  retired  as  soon  as  possible,  so  that  the  society  may  be 
placed  on  a  purely  mutual  basis.  The  charter  also  prohibits 
the  society  from  employing  any  person  to  solicit  business,  or 
to  make  house-to-house  collection  of  premiums.  This  pro- 
vision is  designed  to  obviate  the  large  expense  of  developing 
an  agency  system,  abolish  the  commissions  to  agents  and  col- 
lectors, and  thus  effect  a  proportionate  saving  in  the  form  of 
lower  premiums  to  the  insured.  It  is  the  belief  of  the  pro- 
moters of  this  plan  that  15  per  cent,  of  the  ordinary  pre- 
miums can  be  saved  by  doing  away  with  the  agency  system, 
and  introducing  other  economies  of  operation.  One  aim  of 
the  undertaking  is  to  furnish  to  employers,  to  labor  and  so- 
cial organizations,  and  to  other  groups,  an  opportunity  to 
obtain  insurance  and  annuities,  either  individually  or  col- 
lectively, at  low  rates  with  security  and  convenience.  It  is 
stated  that  officials  of  several  industrial  establishments  have 
indicated  their  readiness  to  co-operate  with  the  society,  as 
soon  as  it  begins  its  operations,  through  arrangements  to  fur- 
nish insurance  or  pensions  to  their  employees.  Should  this 
plan  of  "  over-the-counter  "  insurance  be  put  into  operation, 
its  working  would  be  followed  with  much  interest  by  students 
of  insurance  problems. 

It  should  bo  added  that  recently  the  industrial  insurance 
companies  have  shown  a  lively  interest  in  the  problem  of  fur- 
ther reduction  of  rates  for  industrial  insurance.  The  two 
leading  companies  reduced  their  rates  considerably  in  1909. 
This  movement  may  fairly  be  attributed  to  the  influence  of 
the  savings  bank  insurance  experiment  in  ^rassaehusetts,  in 
stimulating  the  industrial  insurance  companies  to  renewed 
efforts  to  cheapen  the  insurance  offered  by  them  to  work- 
ing people.  In  1909  the  Metropolitan  sought  legislation 
in  Massachusetts,  Elaine,  Xew  Jersey,  Kew  York,  Illinois 
and  ]\[innesota,  to  enable  industrial  insurance  companies  to 
sell  life  insurance  at  special  rates  to  employees,  in  groups  of 
100  or  more,  if  the  employer  will  undertake  to  act  as  agents 
for  the  purpose  of  collecting  and  paying  the  premiums,  thus 


190 


OLD   AGE   PENSIONS. 


[Jan. 


saving  the  company  the  expense  for  solicitation  and  collec- 
tion. The  bill  conferring  this  privilege  —  Senate  No.  171  — 
failed  to  pass  in  Massachusetts.  In  Maine,  New  Jersey  and 
Minnesota  the  bill  became  law.  The  rates  for  the  group  in- 
surance, issued  under  the  provisions  of  the  new  laws  in  the 
latter  States,  are  as  follows :  — 


Group  Insurance,  Metropolitan. 
Whole  Life  Policy  paid  up  at  Age  75. 


Age. 

Amount  of  In- 
surance for  5 
Cents  a  Week. 

Age. 

Amount  of  In- 
surance for  5 
Cents  a  Week. 

15 

$163  00 

40 

$74  00 

20, 

137  00 

45, 

61  00 

25 

118  00 

50 

49  00 

30 

102  00 

55 

38  00 

35, 

88  00 

60 

29  00 

The  benefits  offered  in  the  group  insurance  are  available 
only  where  policies  are  issued  on  100  or  more  persons  at  one 
time,  and  premiums  are  all  paid  to  the  company  by  their 
representative  in  one  sum.  Comparison  of  these  rates  for 
group  insurance  with  the  rates  for  regular  industrial  insur- 
ance shows  that  the  amount  of  insurance  offered  under  the 
group  scheme  is  about  30  per  cent,  greater. 


10.  Massachusetts  Savings  Bank  Insurance. 
The  Massachusetts  system  of  savings  bank  insurance  was 
put  into  operation  by  chapter  561  of  the  Acts  of  1907,  au- 
thorizing savings  banks  to  establish  insurance  departments 
under  certain  conditions  laid  down  in  the  act.  A  two-thirds 
vote  of  the  trustees  of  a  bank  is  required  for  the  institution 
of  an  insurance  department.  A  special  insurance  guaranty 
fund  of  not  less  than  $20,000  to  be  placed  at  the  risk  of  the 
insurance  department,  and  a  special  expense  guaranty  fund  of 
not  less  than  $5,000,  must  first  be  provided.  A  certificate  is 
then  issued  by  the  State  Insurance  Commissioner  and  the 
State  Bank  Commissioner,  declaring  the  insurance  depart- 


1910.]  HOUSE  — No.  1400.  191 

ment  established.  It  is  also  required  that  the  department 
take  out  a  license  from  the  State  Insurance  Commissioner. 
When  these  conditions  have  been  complied  with,  the  depart- 
ment may  issue  policies  upon  the  lives  of  persons,  and  may 
sell  annuities,  with  all  the  rights,  powers  and  privileges,  and 
with  all  the  duties,  liabilities  and  restrictions,  in  respect  to 
the  business  of  life  insurance  conferred  or  imposed  by  the 
State  laws. 

The  special  insurance  guaranty  fund,  which  may  not  be 
less  than  $20,000,  the  amount  being  determined  by  the  State 
Actuary,  has  to  be  provided  by  contributions  from  citizens, 
and  is  to  be  repaid  ultimately  out  of  the  profits  of  the  in- 
surance department,  with  interest  at  the  savings  bank  rate. 
The  law  also  provides  for  a  general  insurance  guaranty  fund, 
to  be  raised  through  an  assessment  of  4  per  cent,  upon  all 
premiums  received  by  any  of  the  banks.  This  fund  is  jDlaced 
under  the  management  of  a  board  of  seven  trustees,  appointed 
by  the  Governor,  who  have  general  supervision  over  the 
savings  bank  insurance  system.  The  services  of  a  State 
Actuary  and  assistants,  whose  salaries  are  paid  by  the  State, 
are  placed  at  the  disposal  of  the  trustees.  Thus  the  expense 
of  administering  the  savings  bank  insurance  is  borne  largely 
by  the  Commonwealth. 

The  law  lays  do"\^Ti  two  important  restrictions  regarding  the 
issue  of  savings  bank  insurance,  namely:  first,  no  bank  may 
write  any  life  policy  for  more  than  $500,  or  any  annuity  con- 
tract for  more  than  $200  per  annum;  second,  no  bank  may 
employ  any  solicitors  or  house-to-house  collectors  of  insurance. 
These  restrictions  were  designed  to  eliminate  the  expense  usu- 
ally attendant  upon  the  issue  of  insurance  in  small  amounts 
to  working  people. 

This  plan  of  savings  bank  insurance  was  devised  by  Louis 
D.  Brandeis,  Esq.,  of  the  Boston  bar,  and  the  campaign  for 
the  enactment  of  the  measure  putting  it  into  force  was  con- 
ducted by  the  Massachusetts  Savings  Insurance  League.  The 
aim  of  the  plan  is  to  furnish  insurance  to  working  people 
in  small  amounts,  at  low  rates,  with  proper  security.  The 
author  of  the  plan  states  the  purpose  of  the  act  to  be :  first,  to 
give  to  j\[assachusetts  wage  earners  an  opportunity  to  secure 


192  OLD   AGE   PENSIONS.  [Jan. 

safe  life  insurance  at  the  lowest  possible  cost,  as  a  substitute 
for  industrial  life  insurance,  on  which  the  expense  of  conduct- 
ing the  business  is  about  40  per  cent,  of  the  premiums  paid ; 
second,  to  give  to  Massachusetts  wage  earners  an  opportunity 
to  make  provision  for  their  old  age  by  the  purchase,  out  of 
current  earnings,  of  annuities  at  the  lowest  possible  cost.^ 
The  scheme  is  designed  to  furnish  a  partial  solution  of  the 
problem  of  providing  for  the  superannuated  workingman,  "  by 
making  the  opportunities  for  saving  the  working-man's  money 
as  numerous  as  are  the  opportunities  for  wasting  it." 

The  law  went  into  effect  June  26,  1907.  The  system  was 
first  put  into  actual  operation,  however,  in  June,  1908,  when 
the  savings  bank  of  Whitman  established  the  first  insurance 
department  under  the  act.  In  November,  1908,  the  People's 
Savings  Bank  of  Brockton  opened  an  insurance  department. 
Other  banks  have  become  agents  of  the  Whitman  and  Brockton 
banks.  It  is  the  policy  of  the  promoters  of  the  savings  bank 
insurance  to  work  for  the  establishment  of  a  comparatively 
few  insurance  departments  in  different  sections  of  the  State, 
and  to  induce  other  banks  to  become  agencies  for  these  depart- 
ment banks.  The  insurance  banks,  moreover,  have  agencies 
in  large  manufacturing  and  commercial  houses,  people's  insti- 
tutes, social  settlements  and  trade  unions. 

The  policies  offered  by  the  savings  bank  insurance  provide 
for  straight  life  insurance,  for  endowment  insurance,  for  an- 
nuities and  for  combinations  of  insurance  and  annuity.  The 
following  varieties  of  policy  may  be  distinguished:  (A) 
Straight  life  policy;  (B)  Endowment  policy;  (C)  Simple 
annuity  policy;  (D)  Rebate  annuity  policy;  (E)  Insurance 
and  annuity  policy;  (F)  Immediate  annuity  policy.  All  of 
these  policies  participate  in  the  profits  of  the  insurance  de- 
partment of  the  issuing  bank.  The  maximum  amount  of  the 
life  and  endowment  policies  is  $500;  of  the  annuity  policies, 
$200.  The  same  person,  however,  iiaaj  take  out  policies  in 
any  desired  number  of  banks.  Eor  the  purpose  of  explaining 
the  general  nature  of  these  policies,  it  is  sufficient  to  give  the 
monthly    premium    rates    of    $500    insurance,    and    $100 

'  Quarterly  publications  of  the  American  Statistical  Association,  March,  1909;  article, 
"Massachusetts  Savings  Bank  Insurance  and  Pension  System,"  by  Louis  D.  Brandeis, 
pp.  409,410. 


1910.1 


J 


HOUSE  — No.  1400. 


193 


annuity  policies  for  ages  20  to  50,  by  five-year  stages.  The 
rates  for  other  amounts  and  ages  are  in  proportion. 

(A)      Straight  life  policy :  — 

This  policy  provides  for  straight  life  insurance  in  amounts 
up  to  $500  ;  that  is,  the  savings  bank  issuing  a  policy  contracts 
to  pay  to  the  beneficiary  named  a  certain  sum  of  money  on  the 
death  of  the  insured.  The  premiums,  which  are  payable 
monthly,  cease  at  age  75.  The  rates  for  insurance  are  some- 
what lower  for  women  than  for  men.  The  monthly  premiums 
for  a  $500  policy  are  as  follows :  — 


Aqe  Next  Bikthdat. 


Life  Policy  for 

$500  paid  up 

at  Age  75. 


20, 
25, 
30. 
35. 


$0  86 
1  00 
1  15 
1  34 


Age  Next  Birthday. 


40, 
45, 
50, 


Life  Policy  for 

$500  paid  up 

at  Age  75. 


SI  58 
1  91 
2138 


(B)      Endowmient  policy :  — 

Two  kinds  of  endowment  policy  are  offered,  —  one  provid- 
ing for  the  payment  of  the  insurance  at  age  65  or  at  previous 
death,  the  other  providing  for  the  payment  of  the  insurance 
at  the  end  of  twenty  years  or  at  previous  death. 

1.  Age  65,  Endowment  Policy.  —  This  policy  provides 
that  the  savings  bank  issuing  it  will  pay  to  the  insured  a  speci- 
fied amount,  up  to  $500,  when  he  reaches  the  age  of  65  years. 
If  the  latter  dies  before  that  age,  the  money  will  be  paid  to  the 
beneficiary  designated  in  the  policy.  The  monthly  rates  for 
$500  endowment  are  as  follows :  — 


AoE  Next  Birthday. 

Kndowment 

Policy  for 

$500,  maturing 

at  .\ge  65. 

.\ge  Next  Birthday. 

Endowment 

Policy  for 

$500,  maturing 

at  Age  65. 

20 

25 

30 

35 

$0  95 

1   12 
1  32 
1  58 

40 

45 

50 

$1  95 

2  51 

3  42 

194 


OLD   AGE   PENSIONS. 


[Jan. 


2.  Twenty-ijear  Endoivment  Policy.  —  This  policy  pro- 
vides that  the  savings  bank  issuing  it  will  pay  to  the  insured 
a  specified  amount,  up  to  $500,  at  the  end  of  the  twenty 
years.  If  the  insured  dies  before  the  maturing  of  the  policy, 
the  money  will  be  paid  to  the  beneficiary  designated.  The 
monthly  rates  for  $500  endowment,  at  twenty  years,  are  as 
follows :  — 


Age  Next  Birthdat. 

Endowment 

Policy  for 

$500,  maturing 

at  the  End  of 

Twenty  Years. 

Age  Next  Birthday. 

Endowment 

Policy  for 

$500,  maturing 

at  the  End  of 

Twenty  Years. 

20 

25 

30 

35 

$1  47 

1  81 

2  24 
2  85 

40 

45 

50 

$3  74 
5  15 
7  60 

(C)      Simple  annuity  policy :  — 

This  policy  guarantees  the  insured  the  regular  payment  of 
a  certain  sum  of  money  each  year  after  he  reaches  the  age  of 
60  or  65,  according  to  the  terms  of  the  policy.  If,  however, 
the  insured  dies  before  reaching  the  specified  age,  the  amounts 
paid  in  premiums  are  not  returned  to  his  family.  The  rates 
for  annuities  are  somewhat  higher  for  women  than  for  men. 
The  monthly  premiums  for  annuities  payable  respectively  at 
ages  60  and  65,  in  the  case  of  men,  are  as  follows :  — 


Age. 


Monthly  De- 
posits for  $100 
Annuity,  begin- 
ning at  Age  60. 


Monthly  De- 
posits for  .$100 
Annuity,  begin- 
ning at  Age  65. 


20, 
25, 
30, 
35, 
40, 
45, 
50, 


$0  48 

62 

81 

1  09 

1  51 

2  19 

3  39 


i 


1910.] 


HOUSE  — No.  1400. 


195 


(D)  Eeturnable  premium  annuity  policy:  — 
This  policy  differs  from  the  preceding  in  this  respect :  it 
provides  that  in  the  event  of  the  death  of  the  insured  prior 
to  the  maturity  of  the  policy  all  premiums  paid  by  him  shall 
be  returned  to  the  beneficiary  named  in  the  policy.  The 
monthly  rates  for  ages  60  and  65,  in  the  case  of  men,  are  as 
follows :  — 


Age. 

Monthly  De- 
posits for  SlOO 
Annuity,  begin- 
ning at  Age  60. 

Monthly  De- 
posit's for  SlOO 
Annuity,  begin- 
ning at  Age  65. 

20,         .        . 

$0  99 

SO  68 

25, 

1  32 

82 

30, 

1  76 

1  08 

35, 

2  39 

1  44 

40.         .        . 

3  36 

1  98 

45,         .        . 

5  02 

2  81 

50, 

8  37 

4  23 

(E)      Insurance  and  annuity  policy:  — 

This  policy  offers  a  combination  of  life  insurance  and  old 
age  pension.  It  provides  for  the  payment  to  the  insured  of  a 
specified  sum  each  year  after  he  reaches  the  age  of  65 ;  or,  in 
case  of  prior  death,  for  the  payment  of  a  certain  amount  to  the 
family  or  other  beneficiary.  Further,  it  provides  that,  in 
case  the  annuitant  dies  between  ages  65  and  69,  a  sum  equal  to 
the  difference  between  the  amount  of  the  insurance  and  the 
amount  received  by  him  in  annuities  shall  be  paid  to  the 
beneficiary.  Two  forms  of  this  combination  policy  are 
offered, — one  providing  for  $500  life  insurance  and  $100 
annuity  after  65,  the  other  providing  for  $500  life  insurance 
and  $200  annuity  after  65. 

A  combined  insurance  and  annuity  policy  was  first  issued 
without  the  rebate  feature.  To  make  provision  for  the  case 
of  annuitants  who  might  die  shortly  after  the  age  of  65,  an 
improved  form  of  policy  was  devised.  Under  its  terms,  if  the 
policy  holder  were  to  die  between  the  ages  of  60  and  65,  after 
receiving  the  first  annuity  payment  of  $100,  the  bank  would 


196 


OLD  AGE   PENSIONS. 


[Jan. 


pay  $400  to  the  insured's  beneficiary ;  if  tlie  insured  were  to 
die  between  the  ages  of  66  and  67,  after  receiving  two  annui- 
ties of  $100  apiece,  the  bank  would  pay  $300  to  the  benefici- 
ary;  if  the  insured  were  to  die  between  the  ages  of  67  and  68, 
after  receiving  three  annuities  of  $100  apiece,  the  bank  would 
pay  $200  to  the  beneficiary;  if  the  insured  were  to  die  be- 
tween the  ages  of  68  and  69,  after  receiving  four  annuities  of 
$100  apiece,  the  bank  may  pay  $100  to  his  beneficiary.  If 
the  insured  were  to  live  to  the  age  of  69,  then  he  would  have 
received  five  annuities  of  $100  apiece,  so  that  nothing  further 
would  be  paid  to  the  beneficiary  in  case  of  the  insured's 
death  after  that  time.  It  will  be  seen  that  this  policy  provides 
for  the  payment  of  at  least  $500,  whether  the  insured  lives  or 
dies,  and,  furthermore,  will  pay  a  great  deal  more  than  $500 
if  the  insured  lives  to  a  ripe  old  age. 

The  monthly  rates  for  the  two  forms  of  insurance  and 
annuity  policy  are :  — 


Age  Next  Birthday. 


$500  Insurance  to  Age  65,  with  Life 
Annuity  at  Age  65.  Insurance  then 
diminishes  by  the  amount  op  annuity 
received. 


$500  Insurance  and 
$100  Annuity. 


$500  Insurance  and 
$200  Annuity. 


20. 
25, 
30, 
35, 
40. 
45, 
50, 


$1  12 
1  33 
1  61 

1  98 

2  51 

3  35 

4  75 


$1  47 

1  81 

2  24 

2  85 

3  74 
5  15 
7  60 


(F)      Immediate  annuity  policy :  — 

This  is  the  last  form  of  policy  offered  by  the  savings  bank 
insurance,  the  rates  having  been  published  in  September, 
1909.  The  policy  provides  for  the  purchase  of  annuities  on 
which  payment  begins  one  year  from  the  date  of  the  issue  of 
the  policy,  and  continues  yearly  thereafter  during  the  life  of 
the  annuitant.  The  rates  show  the  purchase  price  of  an 
annuity  of  $100  yearly  at  different  ages,  and  also  the  amount 


1910.] 


HOUSE  — No.  1400. 


197 


vi  annuity  that  may  be  purchased  by  $1,000  at  different  ages. 
The  rates  for  women  are  somewhat  higher  than  the  rates  for 
men.     Following  are  the  rates  for  men :  — 


The  chief  advantages  claimed  for  the  savings  bank  insur- 
ance system,  in  addition  to  the  variety  of  policies  offered, 
relate  to  the  low  cost,  the  high  surrender  values  and  the  per- 
fect safety  of  this  form  of  insurance. 

The  rates  for  straight  life  insurance  through  the  savings 
banks  were  about  25  per  cent,  lower  than  the  former  weekl}' 
payment  rates  of  the  industrial  insurance  companies.  This 
difference  was,  however,  considerably  reduced  by  the  adoption 
of  the  new  rates  of  the  Prudential  and  Metropolitan,  which 
went  into  force  in  1909.  The  amount  of  insurance  now 
offered  at  age  25,  for  a  weekly  premium  of  25  cents,  is  $450, 
instead  of  $405,  as  under  the  old  rates.  The  amount  of  in- 
surance at  age  25,  for  a  weekly  premium  of  30  cents,  is  $540, 
instead  of  $480.  On  the  basis  of  these  new  rates,  the  saving 
on  straight  life  insurance  under  the  savings  bank  system  would 
amount  to  less  than  15  per  cent.  For  example,  a  young  man 
of  25  years,  by  paying  $1  to  the  savings  bank  each  month, 
can  buy  a  life  policy  for  $500,  paid  ii])  at  the  age  of  75.  If 
on  the  other  hand,  he  buys  industrial  insurance,  as  supplied  by 
the  regular  companies,  a  weekly  payment  of  25  cents  —  which 
is  somewhat  higher  than  $1  a  month  rate  —  will  purchase 
only  $450  of  insurance  at  the  new  rates.     Again,  by  paying  a 


198  OLD   AGE   PENSIONS.  [Jan. 

moiithlj  premium  of  $1.33  to  the  savings  bank,  lie  can  insure 
his  life  for  $500,  and  at  the  same  time  secure  a  $100  annuity, 
to  commence  at  the  age  of  65.  Approximately  the  same 
amount  of  premium  is  required  to  purchase  $540  of  life  in- 
surance alone  in  the  industrial  companies,  the  weekly  rate 
for  a  policy  of  this  amount  being  30  cents. 

It  is  pointed  out  that  the  reduction  of  the  cost  of  insurance, 
as  offered  through  the  savings  banks,  is  made  possible  by  the 
elimination  of  certain  heavy  expenses  connected  with  indus- 
trial insurance,  as  ordinarily  administered.  The  cost  of  in- 
surance, it  should  be  explained,  as  represented  by  the 
premiums  charged,  includes  the  net  rate,  which  pays  for  the 
insurance  pure  and  simple,  and  the  "  loading "  of  the 
premium,  to  cover  the  expenses  of  administration.  The  ''  ex- 
pense loading  "  for  industrial  insurance  is  extremely  heavy. 
The  chief  expenses  are  for  solicitation  of  business  and  collec- 
tion of  premiums,  an  army  of  agents  being  employed  for 
these  purposes.  The  savings  banks  are  forbidden  by  law  to 
employ  solicitors  or  house-to-house  collectors.  Another 
source  of  expense  in  the  case  of  industrial  insurance  is  the 
large  number  of  policies  that  lapse,  being  forfeited  for  non- 
payment of  premiums.  Much  of  this  lapse  is  doubtless  in- 
evitable, and  involves  no  material  financial  loss  to  the  in- 
sured. The  industrial  insurance  companies  maintain  that 
they  are  making  strenuous  efforts  to  reduce  the  lapse  rate  to  a 
minimum,  and  produce  evidence  to  show  that  they  have  accom- 
plished something  in  this  direction  within  recent  years.  It 
is  maintained  by  the  savings  bank  insurance  advocates  that  the 
lapse  rate  under  this  system  will  be  less,  and  the  resulting 
gains  to  the  insured  correspondingly  greater.  A  savings  bank 
life  insurance  policy  is  non-forfeitable  for  failure  to  pay  pre- 
miums after  six  monthly  premiums  have  been  paid.  Indus- 
trial insurance  policies  lapse  for  non-payment  of  premium  at 
any  time  within  the  first  three  years.  Finally,  attention  is 
called  to  the  fact  that  the  savings  bank  system  has  the  advan- 
tage of  a  State  contribution  toward  the  cost  of  administration. 
The  actuarial  and  incidental  expenses  of  the  system  are  borne 
in  large  part  by  the  State. 


1910.]  HOUSE  — No.  1400.  199 

Another  advantage  claimed  for  the  Savings  Bank  insurance 
is  the  high  surrender  value  of  the  policies.  The  policies  of 
the  savings  banks  grant  a  surrender  value  at  the  end  of  six 
months  from  the  date  of  issue ;  those  of  the  industrial  insur- 
ance companies  only  at  the  end  of  three  years.  The  following 
illustrations  are  given  by  the  State  Actuary  to  show  the  com- 
paratively high  surrender  values  of  the  savings  bank  policies. 
First,  in  the  case  of  a  straight  life  policy,  with  premiums  ceas- 
ing at  the  age  of  75,  —  the  premiums  of  the  banks  being  pay- 
able monthly,  those  of  the  companies  weekly,  —  the  surrender 
values  of  the  savings  banks  and  of  a  leading  industrial  insur- 
ance company  for  a  straight  life  policy,  taken  out  at  the  age 
of  30,  are  as  follows :  at  the  end  of  ten  years,  —  savings  bank, 
42.7  per  cent,  of  the  premiums  paid,  industrial  insurance  com- 
pany, 27.8  per  cent.;  at  the  end  of  fifteen  years,  —  savings 
bank  47.2  per  cent.,  industrial  insurance  company  30  per 
cent. ;  at  the  end  of  twenty  years,  —  savings  bank  50  per  cent., 
industrial  insurance  company  39.7  per  cent.  Another  indus- 
trial company  offers  somewhat  higher  surrender  values,  as 
follows:  at  the  end  of  ten  years,  31  per  cent.;  fifteen  years, 
36  per  cent. ;  twenty  years,  44  per  cent.  The  paid-up  values 
on  one  of  this  com])any's  policies,  with  a  weekly  premium  of 
5  cents,  and  on  a  savings  bank  policy,  with  a  monthly  pre- 
mium of  25  cents,  taken  out  at  age  20,  are  as  follows :  at  the 
end  of  three  years,  —  savings  bank  $9,  industrial  insurance 
company  $2 ;  at  the  end  of  four  years,  —  savings  bank  $13, 
industrial  insurance  company  $3 ;  at  the  end  of  five  years,  — 
savings  bank  $17,  industrial  insurance  company  $4;  at  the 
end  of  six  years,  —  savings  bank  $20,  industrial  insurance 
company  $5.  It  is  maintained  that  the  savings  bank  insur- 
ance is,  therefore,  not  only  cheaper  than  the  ordinary  in- 
dustrial insurance  to  carry,  but  cheaper  to  unload.^     Finally, 

'  It  is  fair  to  state  that  the  industrial  insuranoe  rompanies  regard  it  as  undesirable 
policy  to  Rive  high  surren<ier  values.  An  official  of  one  of  the  large  companies  states: 
'The  group  of  individuals  who  make  up  the  great  bulk  of  industrial  policy  hoklers  are 
subject  to  frequent  and  rapid  changes  in  their  economic  situation.  The  "tendency  on 
the  part  of  this  gnnip  to  lapse  policies,  or  tf>  r)htain  ttie  .surrender  value  in  times  of 
economic  distress,  is  so  great  that  if  the  imiustrial  insurance  companies  were  to  increase 
surrender  values  it  would  encourage  many  individuals  to  give  up  the  protection  which 
the  policy  affords.  This  is  counter  to  the  underlying  principles  of  industrial  insurance, 
which  was  originated  primarily  to  protect  the  workman,  not  against  loss  of  work  or 
other  causes  which  come  from  poverty,  but  to  protect  him  and  his  family  in  case  of 
death.  .\ny  form  of  insurance  which  offers  surrender  values  as  one  of  the  attractions 
in  the  policy  does  not  fully  realize  the  industrial  insurance  ideal." 


200 


OLD   AGE   PENSIONS. 


[Jan. 


the  absolute  safety  of  savings  bank  insurance  is  emphasized 
as  a  distinct  advantage.  The  very  name  "  savings  hank  "  is 
declared  to  be  a  synonym  for  financial  security. 

The  provisions  of  the  law  relating  to  special  expense  and 
insurance  guaranty  funds,  and  general  insurance  guaranty 
fund,  are  pointed  to  as  safeguarding  perfectly  this  form  of 
insurance.  It  is  required,  moreover,  that  all  agencies  for 
receiving  applications  and  premiums  shall  be  bonded.  The 
Wage  Earners'  Insurance  Committee  of  the  Boston  Mer- 
chants' Association,  which  investigated  the  savings  bank 
insurance,  declared  in  its  report  that  "  these  safeguards  give 
the  policy  holder  a  much  greater  measure  of  moral  and  finan- 
cial security  than  that  afforded  by  any  insurance  company 
in  existence." 

The  number  of  policies  in  force  October  31,  1909,  was 
2,575,  representing  $1,000,000  in  insurance.  The  People's 
Bank  of  Brockton  reported  1,076  policies  in  force,  represent- 
ing an  insurance  of  $1:52,092 ;  the  Whitman  Savings  Bank 
1,499  policies  in  force,  representing  an  insurance  of  $550,091. 

Following  is  a  detailed  statement  of  the  insurance  depart- 
ment of  the  Whitman  Savings  Bank :  — 


Whitman  Savixgs  Baxk,  Policy  Exhibit. 


No.  of 
Policies. 

Amount 
Assured. 

Annuity. 

Monthly  premium  policies:  — 

Life,  paid-up  at  75,   ..... 

229 

$69,832 

— 

Endowment,  at  65,    ..... 

597 

218,292 

— 

Tvventv-vear  endowment. 

334 

101,168 

— 

Insurance  and  one-fifth  annuity. 

23 

9,049 

$1,808 

Insurance  and  two-fifths  annuity, 

21 

10,250 

4,100 

Deferred  annuity,       ..... 

11 

— 

2,000 

Annual  premium  policies:  — 

Ordinarj'  life,    ...... 

14 

7,000 

— 

Twenty-payment  life,          .... 

30 

15,000 

— 

Twenty-year  endowment, 

238 

119,000 

— 

Paid-up  policies:  — 

Term  insurance,          ..... 

1 

500 

— 

Annuity,            ...... 

1 

4 

The  first  full  year  of  operation  of  the  savings  bank  insur- 
ance system,  covered  by  these  figures,  shows  results  that  are 
regarded  by  the  promoters  of  the  plan  as  highly  satisfactory. 
Each  of  the  two  banks,  at  Whitman  and  Brockton,  has  been 


1910.]  HOUSE  — No.  1400.  201 

able  to  maintain  intact  the  guaranty  funds ;  to  set  aside  the 
full  legal  reserve  to  pay  interest  on  the  guaranty  funds ;  and, 
finally,  to  declare  a  dividend  to  policy  holders  of  SYs  per 
cent.  This  means  that  every  policy  holder  who  has  paid 
twelve  months'  premiums  receives  a  rebate  of  the  amount  of 
one  month's  premium.  As  a  result  of  the  dividend  to  policy 
holders,  the  State  Actuary  points  out  that  the  savings  banks 
are  now  offering  insurance  practically  at  2314  P^r  cent,  less 
than  the  industrial  companies. 

As  further  evidence  of  the  generally  beneficial  effect  of  the 
savings  bank  insurance  system,  its  advocate  points  to  the  re- 
duction in  rates  and  modifications  in  policies  which  have  been 
introduced  by  the  leading  industrial  insurance  companies 
since  the  savings  bank  insurance  system  went  into  operation. 

The  following  is  an  interesting  statement  regarding  the 
general  effect  of  the  savings  bank  insurance  movement,  sub- 
mitted by  Louis  D.  Brandeis,  Esq.,  in  a  communication  to 
this  commission,  dated  !November  18,  1909 :  — 

The  success  of  our  savings  insurance  movement  has  been  very 
gi'eat,  and  comparatively  few  people  realize  how  great  it  has  been. 
They  are  apt  to  measure  the  success  only  by  the  amount  of  insurance 
written.  Measured  even  by  that  standard,  I  think  the  system  has 
done  well,  because  the  million-dollar  mark  was  reached  in  a  little 
over  a  year  after  the  system  was  put  into  operation ;  but  the  more 
far-reaching  and  extraordinary  success  has  been  in  its  effect  upon 
the  existing  companies,  of  which  the  Metropolitan  and  Pnidential 
are  the  leaders. 

Its  etf eot  here  has  been  this :  — 

First.  —  For  about  twenty  years  prior  to  putting  forth  our  jilan 
for  savings  bank  insurance  there  had  been  no  reduction  in  premium 
rates  in  the  industrial  companies;  on  the  contrary,  a  change  at  one 
time  had  been  made,  increasing  rates.  Since  our  movement  was 
started,  two  sweeping  reductions  have  been  made  which  have  resulted 
in  reducing  the  rates  of  the  leading  companies  (the  Metropolitan  and 
the  Prudential)  to  an  average  of  about  20  per  cent,  below  what  they 
had  been  for  nearly  twenty  years. 

The  first  of  these  sweeping  reductions  took  effect  January  1,  1!)07; 
the  second,  July  1,  1909;  to  ajiply  to  all  policies  written  subsequent 
to  January  1,  1907.  How  large  the  saving  is  to  the  working  people 
from  its  reduction  will  be  realized  when  one  remembers  that  the  first 
year's  premiums  on   policies  in   the  industrial   departments  of  the 


202  OLD   AGE   PENSIONS.  [Jan. 

Metropolitan  and  Prudential  companies  alone  written  in  the  year  1907 
aggregated  $9,867,175.71,  and  in  the  year  1908,  $9,369,465.28,  in  the 
whole  United  States. 

The  total  premium  income  of  the  Metropolitan  and  Prudential  in 
the  year  1907  was  $76,247,383.90,  and  in  the  year  1908,  $77,894,- 
149.68;  and,  as  the  average  life  of  an  industrial  policy  is  very  short, 
it  will  take  but  a  few  years  to  have  the  greater  part  of  all  of  the 
premium  income  of  the  industrial  companies  represent  insurance 
purchased  at  rates  about  20  per  cent,  lower  than  those  hitherto  pre- 
vailing. 

The  total  premium  income  of  all  industrial  insurance  companies 
from  Massachusetts  business  in  the  year  1908  was  $8,062,389.  It  is 
therefore  safe  to  say  that  within  a  very  short  time  the  saving  effected 
in  Massachusetts  through  the  reduction  in  rates  secured  since  the 
project  for  savings  bank  insurance  was  j^resented  will  exceed  a  million 
dollars  a  year. 

Second.  —  In  addition  to  the  direct  reduction  in  rates,  the  savings 
bank  insurance  campaign  has  led  to  other  changes  beneficial  to 
i:)olicy  holders :  — 

1.  The  Metropolitan  and  Prudential  have  made  their  policies  fully 
paid  up  at  age  75,  whereas  previously  the  obligation  to  pay  premiums 
continued  during  life.  (The  increase  of  benefit  resulting  from  this 
change  is  included  in  the  average  of  20  per  cent,  saving  noted  above.) 

2.  The  companies  have  made  the  full  benefit  payable  after  six 
months  from  the  date  of  writing  the  policy,  instead  of  after  one 
year.  This  is  a  very  important  change,  in  view  of  the  fact  that  a 
majority  of  all  the  industrial  ijolicies  lapse  before  the  end  of  the 
year.  Previous  to  the  savings  bank  insurance  campaign,  the  policies 
of  the  industrial  companies  provided  that  in  case  of  death  within  six 
months  after  the  writing  of  the  policy,  only  one-fourth  of  the  face 
of  the  policy  was  payable;  and  in  case  of  death  within  the  second 
six  months'  period,  onlj-  one-half  of  the  face  of  the  policy  was  pay- 
able; so  that  the  full  benefit  did  not  become  payable  until  after  the 
end  of  the  first  year,  —  a  j)eriod  which  less  than  half  of  the  policies 
survive. 

3.  Prior  to  the  savings  bank  insurance  campaign  there  was  no  such 
thing  as  ''  extended  insurance  "  in  case  of  lapse  in  industrial  com- 
panies; that  is,  when  the  policies  lapsed,  except  in  those  rare  in- 
stances where  there  was  a  cash  surrender  value  paid,  the  policy  holder 
got  nothing.  Now  the  comjaanies  have  extended  insurance  after 
three  years. 

4.  The  industrial  companies,  notably  the  Metropolitan,  have  also 
borrowed  much  from  the  savings  bank  insurance  system,  following 
closely  our  new  forms  of  policy,  particularly  the  combined  insurance 
and  pension  policy,  and  have  made  an  attempt  to  introduce  certain 
sociological  features  into  their  business. 


* 


1910.]  HOUSE  — No.  1400.  203 

The  reforms  thus  effected  in  the  business  of  the  industrial  insurance 
companies  have  of  course  made  competition  with  them  much  more 
ditTicult,  because  the  e\*ils  of  the  system  have  been  materially  reduced ; 
but  the  evils  are  still  very  gxeat,  and  in  the  matter  of  cost  alone  the 
savings  bank  insurance  still  takes  an  important  lead.  For  instance, 
the  cost  of  our  regular  monthly  premium  policy  is  on  an  average  15 
per  cent,  less  than  the  weekly  ijremium  policy  in  the  industrial  com- 
panies, besides  having  other  important  advantages,  —  among  other 
things :  — 

1.  The  savings  bank  policies  ai*e  participating,  whereas  the  policies 
in  the  Metropolitan  and  Prudential  are  non-participating. 

2.  The  savings  bank  policies  have  full  immediate  benefit,  whei'eas 
the  policies  in  the  industrial  comjianies  pay  only  one-half  benefit  in 
case  of  death  within  the  first  six  months. 


204  OLD   AGE   PENSIONS.  [Jan. 


IV. 

PKOPOSED  PLANS  OF  OLD  AGE  PENSIONS  OK 

INSUEANCE. 


1.     Bills  ustteoduced  in  Massachusetts  Legislature, 

1903  TO  1909. 
The  first  general  old  age  pension  bill  to  be  presented  in  the 
Massachusetts  Legislature  was  House  No.  1023  of  the  year 
1903,  entitled  "  An  Act  to  provide  for  State  pensions  for 
the  aged  and  infirm,"  introduced  on  petition  of  Frederick 
Deitrick  and  others.  The  bill  provided  for  a  system  of  pen- 
sions to  be  granted  to  all  male  voters  65  years  of  age  or  over, 
under  certain  restrictions.  The  applicant  for  a  pension 
must  have  been  a  citizen  of  the  State  for  thirty-five  years,  the 
last  ten  years  being  continuous ;  must  have  been  incapacitated 
for  labor,  with  no  means  of  support,  and  no  wife  or  child  able 
to  support  him.  A  majority  of  the  board  of  aldermen  or 
selectmen  must  have  certified  that  the  applicant  had  never  been 
convicted  of  a  felony,  and  was  entitled  to  a  pension  under  the 
terms  of  the  act.  The  amount  of  the  pension  was  $72  a  year. 
The  system  was  to  be  administered  by  a  State  pension  board 
of  three  members.  The  expenses  of  the  system  were  to  be 
added  to  the  State  tax  assessed  upon  the  cities  and  the  towns 
according  to  valuation. 

In  1904  another  general  pension  bill  was  offered,  House 
NTo.  1014,  entitled  "  An  Act  to  provide  for  a  system  of  old  age 
pensions,"  introduced  on  the  petition  of  Mr.  Brigham  of  Marl- 
borough. This  measure  later  reappeared  as  House  No.  1362, 
which  was  moved  as  a  substitute  for  the  adverse  report  of  the 
committee  on  probate  and  chancery  regarding  the  first  bill. 
Under  the  provisions  of  this  measure,  pensions  were  to  be  paid 
to  all  male  citizens  of  the  Commonwealth  65  years  of  age  who 
met  certain  qualifications.     The  applicant  must  not  have  been 


1910.]  HOUSE  — No.  1400.  205 

already  in  receipt  of  a  pension  from  the  State,  city  or  town ; 
must  have  paid  a  poll  tax  for  twenty-five  years ;  must  not  have 
been  convicted  of  a  jail  offence  within  ten  years ;  must  be  certi- 
fied by  a  member  of  the  General  Court,  a  mayor,  a  councilman 
or  some  other  official,  as  designated  in  the  bill,  as  of  good 
moral  character,  and  not  addicted  to  the  excessive  use  of  in- 
toxicating liquors ;  and  must  have  been  a  resident  of  the 
State  for  ten  years  preceding  the  application.  The  amount 
of  the  pension  was  $2  per  week.  The  bill  provided  for  an 
increase  of  the  poll  tax  to  an  amount  not  exceeding  $5.  The 
cities  and  towns  were  to  retain  $1  from  each  tax  bill,  and  the 
Commonwealth  was  to  receive  the  remainder  of  the  proceeds, 
to  defray  the  expenses  of  the  pension  system.  Any  deficit  in 
the  pension  finances  was  to  be  met  from  the  State  treasury. 

In  1905  this  bill,  slightly  amended,  was  again  introduced 
on  the  petition  of  Mr.  Brigham  of  Marlborough,  appearing  as 
House  No.  301  and  House  No.  1042.  The  provisions  relating 
to  the  poll  tax  were  changed  somewhat,  in  order  to  give  citi- 
zens the  option  of  paying  the  old  $2  tax  or  a  new  pension  poll 
tax  as  assessed  by  the  State  Treasurer.  Only  persons  paying 
the  latter  were  to  be  eligible  for  pensions. 

In  1906  the  bill  was  introduced  for  the  third  time,  upon 
the  petition  of  Mr.  Brigham  of  Marlborough,  with  further 
changes,  as  House  No.  874.  The  pension  age  was  raised  to  70 
years.  The  applicant  must  not  have  been  convicted  of  a 
felony  within  five  years.  Upon  motion  to  substitute  for  the 
report  of  the  committee  to  which  this  bill  was  referred.  House 
No.  1050  was  introduced.  In  this  substitute  measure,  the 
pension  age  was  again  lowered  to  65  years.  The  amount  of 
the  pension  was  increased  to  $3  per  week. 

Another  general  pension  bill,  House  No.  263,  was  intro- 
duced in  1906,  on  petition  of  J.  J.  Conway  and  others.  This 
measure,  entitled  "  An  Act  to  establish  a  system  of  old  age 
pensions,"  provided  for  a  grant  of  pensions  to  residents  of  the 
State  of  forty  years'  standing  at  the  age  of  sixty  years.  Appli- 
cants must  further  have  paid  into  the  treasury  of  the  State 
$2  per  year  from  the  age  of  20  to  the  age  of  60,  and  must  be 
certified  by  the  overseers  of  the  poor  as  a  person  in  need  of 
aid  and  deserving  a  pension.     The  amount  of  the  pension  was 


206  OLD   AGE   PENSIONS.  [Jan. 

fixed  at  $30  per  month.  The  expenses  of  the  system  were  to 
be  met  out  of  the  receij)ts  from  a  $2  poll  tax. 

In  1907  Mr.  Brigham  of  Marlborough  introduced  for  the 
fourth  time  a  general  pension  bill,  House  No.  275,  which  was 
identical  in  provisions  with  House  No.  1050  of  the  preceding 
year. 

In  1908  the  same  measure  was  introduced,  on  petition  of 
David  P.  Keefe,  as  House  No.  1028. 

In  1909  this  bill  reappeared  as  House  No.  628,  accompany- 
ing the  petition  of  J.  R.  Crozier. 

Another  general  pension  bill  of  1909  was  House  No.  393, 
accompanying  the  petition  of  N.  M.  McDonald  and  others, 
entitled  "  An  Act  to  authorize  cities  and  towns  to  grant  pen- 
sions to  certain  of  their  citizens."  This  bill  would  authorize 
cities  and  towns  to  grant  pensions  to  all  citizens  55  years  of 
age  or  over  who  had  no  means  of  making  a  living  and  an 
income  of  not  more  than  $5  a  week. 

2.    Schemes  proposed  by  Individuals. 

(a)  An  Annuity  System  for  Employees,  proposed  by  Magnus  W. 
Alexander  of  the  General  Electric  Company,  and  Chairman,  Mas- 
sachusetts Commission  on  Old  Age  Pensions,  Annuities  and  Insur- 
ance. 

The  following  plan  is  recommended  to  the  consideration  of 
individual  and  corporate  employers  as  the  basis  of  a  con- 
tributory system  for  old  age  provision,  and  a  reward  for  long- 
time, meritorious  service  of  employees.  The  proposition  can 
be  justified  on  general  as  well  as  on  specific  grounds. 

In  general,  it  must  be  admitted  that  the  stress  of  mod- 
ern industrial  life  makes  the  proper  care  of  aged  workers 
a  problem  of  increasing  economic  and  social  importance  and 
necessity.  Unless,  therefore,  individual  employers  take  the 
initiative  in  working  out  a  suitable  solution  of  the  problem, 
the  State  will  be  obliged  to  deal  with  this  matter  when,  under 
political  pressure  of  one  kind  or  another,  a  pension  program 
may  be  instituted  that  may  prove  burdensome  alike  to  the 
industries  and  the  industrial  workers,  and  demoralizing  to 
the  best  character  development  of  the  people. 

On  the  other  hand,  it  is  clear  that  a  frequent  changing  of 


1910.]  HOUSE  — No.  1400.  207 

the  personnel  of  employees  is  expensive  and  ruinous  to  eco- 
nomical production.  To  devise  proper  means  of  lengthening 
the  period  of  service  of  satisfactory  employees,  by  holding 
out  to  them  a  just  reward  for  long-time,  meritorious  employ- 
ment, is,  therefore,  a  matter  of  good  business  judgment;  a 
provision  of  this  kind,  moreover,  will  attract  into  the  service 
of  an  employer  well-intentioned  workers,  who  value  the  pros- 
pect of  steady  employment  and  the  outlook  for  a  more  or  less 
independent  old  age.  Finally,  the  right  scheme  will  stimulate 
among  employees  habits  of  industry  and  steadiness,  and  will, 
therefore,  tend  to  increase  the  industrial  efficiency  of  em- 
ployees. 

Accordingly,  the  plan  herewith  submitted  has  a  two-fold 
object:  it  takes  cognizance  of  an  existing  problem  which  is 
bound  to  claim  increased  attention  as  time  goes  on,  by  stimu- 
lating and  assisting  employees  in  providing  for  their  wants 
in  old  age ;  and,  secondly,  it  recognizes  and  seeks  to  enhance 
the  value  of  one  of  the  most  important  assets  in  competitive 
activity,  —  the  personnel  of  employees. 

The  altruism  of  the  plan,  therefore,  is,  as  it  should  be, 
consistent  with  sound  business  considerations.  The  plan  it- 
S'elf,  to  be  effective  and  equitable,  ought  to  be  based  on  the 
following  underlying  principles :  — 

1.  The  plan  must  be  a  contributory  arrangement,  under 
which  employees,  with  the  aid  of  the  employer,  make  their 
own  provision  for  old  age,  and  the  employer,  in  turn,  ade- 
quately recompenses  his  employees  for  long-time  satisfactory 
service,  which,  in  part  at  least,  has  contributed  to  the  success 
of  the  business.  It  must  be  accepted  as  fundamentally  cor- 
rect that,  in  general,  employees  receive  or  ought  to  receive 
in  wages  full  value  for  services  rendered,  and  that  any  addi- 
tional payment  at  the  end  of  a  fixed  period  of  years  must 
not  be  looked  upon  in  the  light  of  deferred  wages,  but  as  a 
reward  for  long-time  service.  This  bonus,  on  the  other  hand, 
to  be  just  and  equitable,  cannot  be  large  enough  to  provide 
an  adequate  annuity  for  aged  workers.  The  latter  must  make 
essentially  their  own  provision  for  old  age  support  through 
saving,  but  their  endeavor  should  be  facilitated  by  the  em- 
ployer.    Aside  from  arguments  of  thrift,  self-reliance  and 


208  OLD   AGE   PENSIONS.  [Jan. 

industry  in  favor  of  a  contributory  system,  it  can  also  be 
justly  claimed  that  protection  against  industrial  incapacity 
in  old  age  is  an  essential  to  living,  which,  like  all  other  nec- 
essaries of  life,  should  be  provided  for  principally  by  the 
individual  himself,  with  such  assistance  by  the  employer  or 
State  as  circumstances  in  each  case  may  justify. 

2.  While,  in  the  end,  the  plan  ought  to  be  compulsory 
for  all  employees,  —  for  otherwise  suspicion  and  failure  to 
understand  may  keep  many  employees  from  securing  for 
themselves  the  benefits  of  the  provision,  thereby  delaying,  if 
not  even  making  impossible,  the  attainment  of  the  object 
sought,  - — •  yet,  in  order  to  avoid  misunderstanding  and  an- 
tagonism, the  plan  may  at  first  be  placed  on  a  voluntary 
basis.  Those,  however,  who  once  have  accepted  the  provi- 
sions of  the  plan,  should  be  bound  thereby  while  their  em- 
ployment lasts.  A  compulsory,  and,  therefore,  universal 
system,  would  also  facilitate  its  administration. 

3.  Neither  the  right  of  the  employer  to  dispense  at  any 
time  with  the  services  of  any  employee,  nor  the  freedom  of 
movement  of  the  employee,  must  be  interfered  with,  nor 
should  the  employee  through  either  action  be  deprived  of  any 
moneys  that  rightfully  belong  to  him. 

4.  The  financial  interests  and  rights  of  the  employee  must 
be  fully  safeguarded,  and,  on  the  other  hand,  no  undue  finan- 
cial or  moral  obligation  must  be  placed  upon  the  employer. 

5.  The  employee  must  be  protected  against  the  possibil- 
ity of  being  deprived  of  his  bonus  rights  under  this  plan 
through  unjust  discharge  toward  the  end  of  the  required  ser- 
vice period. 

G.  The  employer  should  not  be  called  upon  to  compensate 
for  faithful  service  during  a  stipulated  time  until  such  ser- 
vice has  actually  been  rendered. 

7.  The  plan  should  be  under  co-operative  management, 
with  employer  and  employees  alike  sharing  the  responsibili- 
ties for  the  successful  carrying  out  of  the  undertaking. 

Based  on  these  considerations,  a  plan  has  been  worked  out 
which  contains  essential  features  of  a  new  aspect  of  the 
problem :  — 

1.  The  receipt  of  an  annuity  by  an  employee  is  dependent 


11)10.]  HOUSE  — No.  1400.      '  209 

on  the  completion  of  a  stipulated  service  period,  —  twenty- 
tlve  years,  —  aud  not  upon  the  attainment  of  a  certain  age. 
1  n  this  way  young  men  will  be  attracted  into  the  service  of  an 
employer,  and  will  be  stimulated  early  in  life  to  steadiness 
and  industry. 

2.  All  annuitant  is  not  obliiied  to  leave  the  service  of  the 
employer.  l)nt  may  remain  at  .■^neh  compensation  as  is  mu- 
tually agreed  upon  between  him  and  the  employer.  Skilled 
men,  therefore,  may  become  annuitants  at  an  age  when  their 
retention  in  the  service  might  prove  very  desirable  and 
]u-oiitable,  both  in  view  of  the  quality  of  labor  of  such  men, 
iiast'd  (in  their  long-time  experience,  and  the  moral  effect  of 
their  presence  in  a  large  working  body. 

3.  Every  annuitant  secures  for  himself  a  monthly  allow- 
ance commensurate  with  the  amount  which  he  has  accumu- 
lated during  twenty-five  years  from  savings  and  bonuses;  in 
other  words,  the  payment  of  annuities  is  based  on  actuarial 
science,  which  will  tend  to  make  the  annuity  association  sol- 
vent at  all  times. 

4.  In  paying  bonuses,  the  employer  differentiates  between 
those  who,  on  account  of  their  larger  earnings,  may  be  pre- 
sumed to  be  men  of  skill,  and  therefore  of  especial  value  to 
the  employer,  and  those  who  belong  to  the  class  of  unskilled, 
and  can  therefore  be  replaced  with  little  difficulty. 

5.  The  arbitration  provided  for  in  the  plan  deals  with 
the  bonus  rights  of  the  employee  as  effected  by  a  just  or 
unjust  (iischarge,  and  not  with  the  discharge  itself.  It  penal- 
izes, so  to  speak,  an  employer  for  an  unjust  discharge  of  an 
(•iu])loyee  after  ten  years  of  service,  l-ut  docs  not  interfere 
with  his  inalienable  right  to  discharge,  and  therefore  does 
not  endanger  the  discipline  of  the  establishment. 

The  rhiii.  —  (a)  As  soon  as  an  cuiployci-  shall  have  estab- 
lished an  annuity  association,  every  new  employee  of  more 
than  '21  years  of  age  and  with  at  least  six  months  of  coutinn- 
ous  service  shall  become  (  if  the  ])lan  is  comj)ulsorv,  or  shall 
be  entitled  to  become,  if  the  |)lan  is  voluntai-v)  a  member  f)f 
the  annuity  association,  and  shall  remain  a  member  during 
continuity  of  service  or  until  he  becomes  an  annuitant.  Em- 
]doyees  with  prior  service  at  the  time  of  establishtnent  of  an 


210  -OLD   AGE   PENSIONS.  [Jan. 

annuity   association   may   elect   to   become   members   under 
conditions  hereinafter  provided  for. 

(h)  The  management  of  the  annuity  association  and  the 
care  and  investment  of  its  fund  shall  be  vested  in  a  board  of 
five  trustees,  two  of  whom  shall  be  chosen  by  the  employer, 
two  by  the  association,  and  the  fifth,  as  chairman,  by  the 
other  four  trustees. 

(c)  The  trustees  shall  serve  without  compensation,  but 
they  shall  be  reimbursed  out  of  the  annuity  fund  for  any 
necessary  expenses  incurred  on  account  of  their  services  as 
trustees.  They  shall  have  power  to  make  by-laws  not  in- 
consistent with  the  provisions  of  the  plan,  and  to  employ 
clerical  and  other  assistance,  and  pay  for  such  services  out 
of  the  annuity  fund.  The  board  of  trustees  shall  have  the 
annuity  fund  audited  semi-annually,  and  all  members  no- 
tified of  their  account  with  the  annuity  fund  at  that  time. 

(d)  Each  trustee  shall  be  elected  for  two  years,  and  until 
his  successor  has  been  chosen  and  qualified.  On  a  vacancy 
occurring  in  the  board,  the  successor  to  the  person  whose 
place  has  become  vacant  shall  be  chosen  for  the  unexpired 
term  in  the  same  manner  as  was  his  predecessor. 

(e)  The  employer  shall  designate  one  of  the  trustees  as 
treasurer,  and  place  him  under  adequate  bond,  and  bear  the 
expense  for  such  bonding. 

(/)  Every  member  of  the  annuity  association  shall  con- 
tribute 5  per  cent,  (or  such  other  amount  as  may  be  decided 
upon  for  each  annuity  association)  from  his  wages  or  salary 
as  often  as  the  same  becomes  due,  and  he  shall  continue  to 
contribute  such  amount  for  twenty-five  years-,  or  until  his  em- 
ployment ceases  prior  to  this  time. 

(fj)  Whenever  a  member  of  the  annuity  association  com- 
pletes ten  years  of  membership,  and  therefore  of  continuous 
service,  the  employer  shall  pay  to  the  individual  account  of 
such  employee  with  the  annuity  fund  a  sum  of  $100,  if  the 
employee's  total  contributions  to  the  fund  have  been  $350  or 
more,  and  $75  if  less  than  $350.  He  shall  pay  an  additional 
sum  of  $100  for  further  continuous  service  of  five  years,  if 
during  this  time  the  employee's  total  contributions  have  been 
$175  or  more,  and  $75  if  less  than  $175 ;  and,  similarly,  he 


1910.]  HOUSE  — No.  1400.  211 

shall  i^ay  a  further  sum  of  $150  and  $100  respectively  for 
five  more  years  of  continuous  service ;  and  a  final  sum  of 
$200  and  $150  respectively  for  a  completed  continuous  ser- 
vice of  twenty-five  years,  according  to  whether  the  employee's 
contributions  during  each  of  the  last  two  five-year  periods 
have  been  $175  or  more,  or  less  than  $175. 

(h)  A  member  who  has  completed  twenty-five  years  of 
continuous  membership  in  the  annuity  association  shall  be- 
come an  annuitant,  and  as  such  shall  receive  during  the  re- 
mainder of  his  life  an  annuity  payable  monthly,  whether  or 
not  he  remains  in  the  service  of  his  employer  or  accepts  other 
employment.  The  annuity  shall  be  in  proportion  to  the  an- 
nuitant's account  with  the  association  at  that  time  and  his 
age  at  his  next  birthday,  based  on  the  American  mortality 
table  and  a  3^  per  cent,  interest  rate. 

(i)  Should  an  annuitant  die  before  having  received  in 
monthly  allowances  an  amount  equal  to  his  account  with  the 
annuity  association  at  the  time  of  becoming  an  annuitant, 
his  widow  or  children  or  parents  shall  receive  the  residue  of 
the  annuitant's  account  in  the  same  monthlv  instalments  as 
those  received  by  the  annuitant ;  or,  if  no  widow  or  child  or 
parent  survive,  the  residue  shall  revert  to  the  annuity  asso- 
ciation. In  the  latter  case,  however,  the  trustees  may  defray 
from  this  residue  such  funeral  expenses  as  they  may  deem 
necessary. 

(j)  Should  a  member  of  the  annuity  association  volun- 
tarily quit  his  employment,  and  therefore  the  association, 
during  the  first  ten  years  of  membership,  or  should  he  be  dis- 
charged or  die  during  such  period,  he  or  his  legal  heirs  shall 
receive  back  all  moneys  contributed  by  him,  with  interest  at 
the  rate  of  3  per  cent.,  compounded  semi-annually,  and  he  or 
his  legal  heirs  shall  have  no  further  claim  on  the  annuity 
association  or  its  funds. 

(k)  Should  a  member  of  the  annuity  association,  however, 
voluntarily  quit  his  employment,  and  therefore  the  associa- 
tion, after  ten  and  before  the  completion  of  twenty-five  years 
of  membership,  or  should  he  die  during  such  period,  he  or 
his  legal  heirs  shall  receive  back  all  moneys  contributed  by 
him,  together  with  bonus  or  bonuses  of  the  employer,  the 


212  OLD   AGE    PENSIONS.  [Jan. 

whole  at  4  per  cent,  interest,  compounded  semi-annually,  and 
he  or  his  legal  heirs  shall  have  no  further  claim  on  the  an- 
nuity association  or  its  funds. 

{I)  On  the  other  hand,  should  a  member  of  the  annuity 
association  be  discharged  by  the  employer,  and  therefore 
from  the  association,  after  ten  and  before  the  completion  of 
twenty-five  years  of  membership,  he  shall  stand  discharged 
as  far  as  his  employment  is  concerned,  but  the  justification 
of  the  discharge  shall  be  judged  by  a  committee  of  three,  one 
to  be  chosen  by  the  discharged  employee,  one  by  the  employer, 
with  the  chairman  of  the  board  of  trustees  as  the  chairman 
of  the  committee.  If  this  committee  declares  the  action  of 
the  employer  to  be  justified,  the  discharged  employee  shall 
receive  back  such  moneys  as  if  he  had  voluntarily  quit  his 
employment.  If,  on  the  other  hand,  the  committee  does  not 
justify  the  action  of  discharge  by  the  employer,  the  dis- 
charged employee  shall  receive,  in  addition  to  his  contribu- 
tions and  the  then  paid  bonus  or  bonuses  of  the  employer, 
the  whole  at  4  per  cent,  interest,  compounded  semi-annually, 
the  yet  unpaid  bonus  or  bonuses  of  the  employer ;  and  he  or 
his  legal  heirs  shall  have  no  further  claim  on  the  annuity 
association  or  its  funds.  The  decision  of  the  committee  shall 
be  final  and  conclusive. 

(w)  Any  employee  with  continuous  service  prior  to  the 
establishment  of  the  annuity  association,  who  may  be  admit- 
ted to  the  association,  shall  have  the  privilege  of  dating  back 
his  membership  in  the  association  to  the  time  when  he  would 
have  been  entitled  to  membership  had  the  association  existed 
at  that  time,  or  to  any  date  between  that  time  and  the  actual 
time  of  joining  the  association,  upon  condition  of  depositing 
with  the  annuity  association  a  sum  equal  to  5  per  cent,  of 
the  total  wages  or  salaries  earned  by  him  during  the  full 
period  of  prior  membership.  If  the  latter  has  been  in  ex- 
cess of  ten  years,  the  employer  shall  then  add  the  proper 
bonus  or  bonuses ;  but  no  prior  service  of  more  than  twenty 
full  years  shall  be  recognized  unless  with  the  expressed  ap- 
proval of  the  employer. 

(n)  The  board  of  trustees  shall  have  power  to  recommend 
an  increase  or  decrease  of  the  rate  of  contribution  bv  mem- 


1910.]  HOUSE  — No.  1400.  213 

bers  of  the  association,  and  shall  put  such  change  of  rate  into 
effect  whenever  the  same  has  been  accepted  by  a  majority  of 
the  members  voting  thereon  by  letter  ballot.  The  board  of 
trustees  shall  also  have  power  to  change  the  rate  of  interest 
to  be  paid  on  withdrawals  whenever  the  amount  of  with- 
drawals and  annuity  payments  over  receipts  makes  such 
change  necessary. 

(o)  The  employer  shall  deduct  from  the  wages  and  sal- 
aries of  the  members  of  the  association  the  stipulated  contri- 
butions to  the  annuity  fund,  and  shall  promptly  forward  to 
the  treasurer  of  the  association  the  moneys  thus  collected. 
He  shall  also  promptly  pay  to  the  treasurer  of  the  associa- 
tion the  bonuses  when  the  same  fall  due. 

(p)  The  annuity  association  shall  have  no  financial  claim 
on  the  employer  beyond  the  contributions  from  the  wageS 
and  salaries  of  members  of  the  association  already  collected 
and  the  bonuses  already  earned. 

(q)  The  employer  shall  have  the  right  to  withdraw  the 
annuity  and  bonus  system  at  any  time  by  giving  due  notice 
to  the  board  of  trustees  one  year  prior  to  such  withdrawal, 
and  no  new  member  shall  be  admitted  after  such  notice  has 
been  served.  Tie  annuity  association,  however,  shall  be 
continued  during  the  year  following  the  serving  of  notice, 
for  the  benefit  of  members  and  annuitants ;  and  at  the  end 
of  this  time  the  company  shall  add  to  the  individual  account 
of  every  member  of  more  than  ten  years'  membership  the  pro 
rata  share  of  the  bonus  due  him  at  the  end  of  fifteen,  twenty 
or  twenty-five  years'  continuous  service,  respectively.  The 
pro  rating  shall  be  based  on  full  years  of  service  only. 

(r)  At  the  time  of  the  dissolution  of  the  annuity  svstem 
the  annuity  fund  shall  be  divided  as  follows :  — 

1.  The  annuity  association  shall  buy  in  a  reputable  com- 
])any  an  annuity  for  every  annuitant  at  the  rate  received  by 
him  from  the  association,  and  shall  return  to  the  annuitants 
any  moneys  loft  from  their  accounts  with  the  association 
after  deducting  the  cost  of  such  annuities. 

2.  All  members  of  the  association  of  more  than  ten  and 
less  than  twenty-five  years'  standing  shall  receive  back  all 
their  contributions  and   the  then  paid  bonuses  of  the  em- 


214  OLD   AGE   PENSIONS.  [Jan. 

ployer,  the  whole  at  4  per  cent,  interest,  compounded  semi- 
annually. 

3.  All  other  members  shall  receive  back  their  contributions 
with  3  per  cent,  interest,  compounded  semi-annually. 

4.  All  moneys  then  remaining  in  the  annuity  fund,  after 
deducting  the  yet  unpaid  expenses  of  the  board  of  trustees, 
shall  be  divided  among  all  members  and  annuitants  according 
to  the  length  of  their  membership  in  the  annuity  association. 

(s)  No  assignment  of  any  right  in  or  to  the  annuity  fund 
by  any  member  or  annuitant  of  the  association  shall  be  con- 
sidered valid. 

(t)  In  all  matters  of  dispute  relating  to  the  rights  of  mem- 
bers and  annuitants  of  the  association  and  the  employer,  the 
board  of  trustees  shall  be  considered  as  having  final  power, 
©xcept  as  provided  for  in  article  (i),  and  except  where  any 
matter  is  referred  to  some  other  person  or  persons  by  unani- 
mous vote  of  the  board  of  trustees. 

In  the  foregoing,  the  main  features  of  a  system  have  been 
presented  that  must  be  adapted  to  each  industry  and  its  gen- 
eral wage  schedule,  and  to  local  conditions.  The  amounts 
of  contributions  by  employees  and  of  bonuses  by  employer, 
herein  specified,  are  illustrations  applicable. to  industries  in 
which  the  average  employee  earns  $14  per  week  the  year 
round. 

In  other  industries  these  amounts  will  have  to  be  increased 
or  decreased. 

An  employee  earning  $15  per  week  would  contribute  75 
cents  per  week,  or  $975  in  25  years;  and  the  employer  would 
pay  $550  in  bonuses.  At  31/2  per  cent,  compound  interest 
the  former  sum  would  accumulate  to  $1,550  and  the  latter  to 
$690,  so  that  the  annuitant  from  his  account  of  $2,240  would 
receive  an  annuity  of  about  $12.75  per  month  at  age  50, 
$14.50  at  age  55  and  $16.75  at  age  60,  respectively.  Sim- 
ilarly, an  employee  earning  $10  per  week  would  receive  as  an 
annuitant  about  $8.75  per  month  at  age  50,  $9.75  at  age  55 
and  $11.50  at  age  60,  respectively. 

An  employee  earning  $20  per  week  would  receive  a  monthly 
annuity  of  approximately  $15.50,  $17.75  and  $20.50,  re- 
spectively, at  age  50,  55  and  60. 


1910.]  HOUSE  — No.  1400.  215 

(b)     Scheme  of  Pensions  for  Employees  of  Companies,  proposed  by 

Augustus  P.  Loring,  Esq. 

1.  The  fuud  shall  be  vested  in  three  trustees,  two  to  be 
appointed  b}'  the  company  and  one  to  be  elected  by  ballot  by 
the  operatives  who  participate  in  the  plan.  They  shall  have 
full  power  to  invest  and  reinvest  in  securities  suitable  for  the 
investment  of  trust  funds,  and  shall  be  liable  for  their  own 
wilful  default  only. 

2.  All  persons  who  are  in  the  service  of  the  company  on 
January  1,  1910,  who  were  not  over  40  years  of  age  at  the  time 
of  their  employment,  except  the  general  officers,  may  join  in 
the  benefits  of  the  scheme. 

3.  Any  person  who  was  over  40  years  of  age  at  the  time  of 
his  employment  may  come  under  the  operation  of  this  scheme 
by  paying  the  assessments  that  would  have  accrued  between 
the  age  of  40  and  the  age  at  which  he  was  actually  employed. 
Such  of  the  above  specified  persons  who  do  not  come  into  the 
scheme  on  January  1,  1910,  may  do  so  at  a  later  date  by  pay- 
ing the  assessments  accruing  between  January  1,  1910,  and 
the  date  when  they  joined,  with  interest  at  Syo  per  cent. 
These  assessments  may  be  spread  over  five  years. 

Any  person  except  the  general  officers,  entering  the  ser- 
vice of  the  company  after  January  1,  1910,  may  come  under 
the  operation  of  this  scheme  by  joining  within  six  months 
after  he  is  employed,  or,  if  he  join  at  a  later  date,  by  paying 
the  assessments,  with  interest  at  31/^  per  cent.,  accruing  be- 
tween the  time  when  he  was  employed  and  the  time  when  he 
joined.     These  assessments  may  be  spread  over  three  years. 

4.  Two  and  one-half  per  cent,  shall  be  deducted  from  the 
salary  or  wages  of  each  employee  who  has  joined  in  this 
scheme,  and  paid  to  the  trustees  of  the  fund;  and  a  like  sum 
shall  be  paid  over  by  the  company  at  the  same  time. 

5.  These  suras  shall  be  held  by  the  trustees  as  a  reserve  fund 
until  such  time  as  the  person  making  the  payment  or  on  whose 
account  it  is  made  becomes  an  annuitant  on  the  fund. 

6.  Annuities  shall  be  paid  from  the  funds  contributed  by 
the  annuitant  or  on  his  account,  and  from  all  other  moneys  in 
the  hands  of  the  trustees.  If  these  funds  are  insufficient,  the 
company  shall  make  up  the  deficit.     If  there  is  a  surplus,  the 


216  OLD   AGE    PENSIONS.  [Jan. 

company  shall  be  reimbursed,  without  interest,  for  the  deficits 
made  good  bj  it. 

7.  When  persons  who  have  been  in  the  employment  of  the 
company  for  ten  years  become  incapacitated,  by  infirmity  of 
body  or  mind  (not  the  result  of  their  own  misconduct),  from 
performing  their  usual  duties  for  a  period  of  six  months,  they 
shall  be  entitled  to  a  pension.  All  employees  may  be  retired, 
either  on  their  own  request  or  by  the  request  of  the  company, 
after  reaching  60  years  of  age,  and  shall  thereupon  receive  a 
pension, 

8.  Pension  allowances  shall  accrue  from  dav  to  dav,  and 
shall  be  paid  monthly,  and  shall  terminate  on  the  death  of  the 
beneficiary ;  and  shall  be  for  each  year  of  service  1  per  cent,  of 
the  average  monthly  pay  for  the  term  of  service,  or,  if  such 
term  is  longer  than  ten  years,  then  for  the  last  ten  years 
preceding  retirement.  For  illustration,  if  an  employee  has 
been  in  the  service  of  the  company  for  fifty  years,  and  has 
received  on  an  average  for  ten  years  $50  per  month  in  regular 
wages,  his  pension  allowance  will  be  50  per  cent,  of  $50,  or 
$25  per  month. 

9.  If  an  employee  dies  while  in  the  service  of  the  company, 
not  being  a  pensioner,  his  legal  representatives  may  withdraw 
all  his  contributions  to  the  fund  and  also  those  made  by  the 
company  on  his  behalf,  without  interest.  A  female  employee 
leaving  the  service  for  marriage  shall  have  similar  rights. of 
withdrawal. 

Other  employees  voluntarily  leaving  the  service  of  the  com- 
pany, or  honorably  discharged,  may  withdraw  their  own  con- 
tributions to  the  fund  without  interest ;  but  employees  dis- 
charged for  fraud  or  misbehavior,  or  resigning  or  leaving 
the  service  for  marriage  to  avoid  dismissal,  shall  forfeit  all 
claim  on  the  fund,  in  the  discretion  of  the  trustees. 

10.  N^o  action  which  shall  now  or  hereafter  be  taken  in  con- 
nection with  the  origin  or  furtherance  of  a  pension  fund  or 
plan  shall  be  held  or  construed  to  give  any  officer,  agent  or 
employee  a  right  to  be  retained  in  the  service  or  become  en- 
titled to  a  pension  allowance ;  but,  on  the  contrary,  the  com- 
pany may  discharge  any  officer,  agent  or  employee  at  any  time 
when,  in  its  judgment,  the  interests  of  the  company  so  re- 
quire, without  liability  for  pension  or  other  allowances  save 


1910.]  HOUSE  — No.  1400.  217 

only  salary  or  wages  then  earned  and  unpaid,  and  withdrawals 
as  above  provided. 

11.  All  benefits  of  the  pension  fund  shall  be  inalienable 
and  unassig-nable,  and  shall  inure  for  the  sole  benefit  of  the 
member;  and  should  the  member  in  any  way  attempt  to 
alienate  any  benefit  he  is  or  may  be  entitled  to  derive  from  the 
fund,  or  should  he  become  bankrupt  or  insolvent,  his  interest 
in  the  fund  shall  thereupon  cease,  and  all  payments  made  by 
him  or  on  his  behalf  to  the  fund  shall  thereupon  be  absolutely 
forfeited.  Nevertheless,  it  shall  be  competent  for  the  trustees 
in  their  uncontrolled  discretion  to  recreate  the  interest  of  the 
member  either  in  whole  or  in  part,  as  they  may  think  fit,  and 
for  the  benefit  of  the  member  or  of  his  family  or  of  any  person 
or  persons  dependent  upon  him,  as  they  may  think  fit. 

The  trustees  shall  interpret  the  words  "  incapacitated," 
"  misconduct,"  "  fraud,"  "  misbehavior,"  or  the  expression 
"  resigning  or  leaving  the  service  for  marriage  to  avoid  dis- 
missal." 

12.  The  expense  of  administering  the  fund  shall  be  borne  by 
the  company. 

13.  The  acceptance  of  a  pension  allowance  shall  not  debar 
the  beneficiary  from  engaging  in  other  business. 

14.  In  the  event  of  the  dissolution  or  liquidation  or  merger 
of  the  company,  or  in  the  event  of  its  abandonment  of  a  pen- 
sion system,  the  trustees  shall  first  buy  annuities  for  the  pen- 
sioners on  the  fund  equal  to  the  amount  of  their  pension,  and 
shall  then  promptly  divide  the  balance  of  the  fund  among  the 
employees  in  proportion  to  their  contributions. 

Pension  Fund. 
This  certifies  tlial 
aged  years  on  last  birthday,  which  was  on 

anrl  who  entered  the  service  of  tlie 
company  on  ,  has  become  a  subscriber  to  the 

pension  scheme  of  the  company,  estabUshed  January  1. 

IfllO,  according  to  the  terms  and  conditions  of  said  scheme,  which 
are  hereto  annexed. 

A, 
B, 
C, 
Trustees. 


218  OLD   AGE   PENSIONS.  [Jan. 


(c)    Contributory  Scheme  for  Old  Age  Pensions,  proposed  by  Sir  John 
Filter,  48  Rue  Michel-Ange,  Paris,  France. 

This  is  a  plan  for  providing  pensions  for  all  aged  persons, 
and  at  the  same  time  promoting  thrift,  education  and 
efficiency.    It  is  voluntary  and  contributory. 

The  scheme  provides  for  the  institution  of  a  special  State 
annuity  department  of  the  post  office,  in  which  people  may 
insure  for  themselves  annuities  varying  in  amount  up  to  the 
maximum  of  £22  yearly  from  the  age  of  55,  and  £44  yearly 
from  the  age  of  65.  Every  boy  and  girl  on  attaining  the  age 
of  15  years  receives  from  the  department  a  birthright  annuity 
grant  of  the  value  of  £30,  as  at  the  age  of  55.  "  This  sum,  to 
form  the  nucleus  of  the  annuity,  is  credited  to  the  assured  in 
the  book  which  is  presented  to  every  boy  and  girl  on  the 
fifteenth  birthday  by  the  authorities  of  the  district  in  which 
they  live." 

The  nucleus  for  an  annuity  thus  created  can  be  increased  by 
the  assured  in  various  ways:  through  education,  handicraft, 
assiduity,  military  and  marksmanship  prizes,  each  of  the 
value  of  £5  or  £10,  as  at  the  age  of  55,  and  through  the  pay- 
ment, regularly  or  irregularly,  of  any  sums,  however  small,  to 
the  amount  of  the  assured.  Sums  so  paid  are  at  once  in- 
creased by  compound  interest,  at  the  rate  of  4  per  cent,  per 
annum,  to  the  age  55 ;  and,  further,  by  an  amount  equal  to 
that  paid  in  by  the  assured.  On  the  additional  contributions 
thus  made  by  the  State  no  interest  is  allowed.  However,  after 
the  assured  has  attained  the  age  of  35  years  no  sums  exceeding 
£2  are  paid  by  the  State  in  this  way  during  any  one  year ;  and 
when  the  amounts  credited  by  the  State  have  reached  a  total  of 
£10,  no  further  grants  are  made. 

The  premiums  may  be  paid  in  any  post  office  of  the  United 
Kingdom,  where  special  stamps  are  affixed  to  the  book  kept  by 
the  assured.  These  books  are  signed  every  year  by  the  proper 
authorities  and  are  totalized  as  at  age  55. 

The  amounts  of  the  birthright  and  prize  grants,  and  of 
the  premiums  paid  by  the  insured,  are  untransferable  and 
unattachable  on  any  condition  whatever.  If,  however,  the 
holder  of  a  grant  dies,  "  the  State  is  freed  from  all  liability 


1910.]  HOUSE  — No.  1400.  219 

either  as  to  capital  or  annuity ;  the  heirs  of  the  deceased  policy 
holder  do  not  inherit  any  sums  which  may  have  been  paid  in 
by  the  deceased,  but,  as  the  heirs  themselves  are  policy  holders, 
they  benefit  by  the  death,  as  the  advantages  provided  by  their 
own  policy  are  calculated  on  the  basis  that  policies  that  lapse 
through  death  revert  to  the  State."  Furthermore,  should  the 
assured  fail  to  increase  his  total  accumulated  capital  calcu- 
lated as  at  age  55  to  a  minimum  amount  of  £120,  then  the 
State  analyzes  the  original  grant  given  to  him,  and  merely 
repays  him  the  premiums  paid  in  and  the  prizes  that  he  may 
have  won ;  the  latter  are  paid  out  at  the  rate  of  one-tenth  each 
year  for  ten  years. 

The  amount  of  the  annuity  paid  to  the  assured  from  age  55 
to  age  65  is  5V2  per  cent,  per  annum  on  his  accumulated  cap- 
ital. From  age  65  to  death  the  amount  of  the  annuity  is  11 
per  cent,  on  the  accumulated  capital.  The  annuities  are  pay- 
able monthlv. 

The  amount  of  capital  which  any  assured  person  shall  be 
allowed  to  accumulate,  calculated  as  at  age  55,  is  limited  to 
£400.  When  that  limit  is  reached  no  further  premiums  shall 
be  received.  Thus,  the  maximum  amount  of  annuity  ob- 
tainable at  age  55  on  the  5l^  per  cent,  basis  is  £22 ;  and  the 
maximum  annuity  obtainable  at  age  65  on  the  11  per  cent, 
basis  is  £44. 

The  annuity  prizes  which  may  be  earned  by  an  assured 
person  are:  first,  £5  on  passing  an  educational  standard  ex- 
amination before  attaining  the  age  of  17  years;  second,  £5 
on  passing  a  standard  examination  in  any  handicraft  before 
attaining  the  age  of  20  years ;  third,  £10  on  the  production 
of  an  assiduity  certificate,  after  having  attained  the  age  of  20 
years,  certifying  that  the  holder  has  been  in  regular  employ- 
ment of  some  description  for  a  period  of  at  least  ten  months 
in  each  year,  from  the  age  of  15  to  that  of  20  years,  unless 
prevented  by  sickness;  fourth,  a  military  and  marksmanship 
certificate,  attesting  that  the  holder  has  passed  the  tests  re- 
quired by  the  War  Office  for  proficiency  in  the  use  of  the 
rifle.  It  is  also  contemplated  that  institutions  and  societies 
will  establish  prizes  in  the  form  of  additions  to  the  annuity 
fund. 


220  OLD   AGE    PENSIONS.  [Jan. 

In  addition  to  the  contributions  by  the  assured  and  by  the 
State,  provision  is  also  made  for  contributions  by  employers. 
The  following  schedule  for  such  contributions  is  proposed: 
first,  for  employees  earning  daily  wages  not  exceeding  2s.  6d., 
contributions  from  the  employer  double  the  amount  paid  in 
by  the  assured ;  second,  for  employees  earning  daily  wages 
exceeding  2s.  6d.  but  not  exceeding  6s.,  contributions  from 
employer  equal  in  amount  to  the  payment  by  the  assured; 
third,  for  employees  earning  daily  wages  exceeding  6s.  but 
not  exceeding  10s.,  contributions  from  the  employer  to  an 
amount  equal  to  one-half  of  the  payment  by  the  assured. 
These  contributions  by  the  employer  are  to  cease  in  every 
case  when  the  accumulated  capital  of  the  assured  reaches  the 
£400  maximum. 

The  cost  of  this  scheme,  estimated  on  the  assumption  that 
every  one  takes  advantage  of  its  provisions,  and  that  the  capi- 
tal invested  produces  3  per  cent,  annually,  is  calculated  at 
£5,414,666  per  annum  from  the  day  the  scheme  goes  into 
operation. 

The  principal  advantages  of  the  scheme,  as  set  forth  by  the 
author,  are  in  brief  as  follows :  First,  the  pension  provided 
is  not  a  charity,  —  it  is  granted  as  a  right  through  a  national 
institution,  to  which  all  contribute  and  from  which  all  re- 
ceive. Second,  the  government  annuity  book  will  serve  as 
a  "  way-bill  "  for  the  assured,  as  a  certificate  of  character, 
which  will  be  of  great  help  to  him  throughout  life.  Third, 
all  sums  paid  in,  however  small  and  however  irregularly,  are 
at  once  capitalized  as  at  age  55,  and  the  amount  of  the  an- 
nuity accruing  is  shown  every  year ;  thus  the  payment  of 
premiums  for  the  distant  future,  which  is  always  an  unpal- 
atable proposition,  is  served  up  in  the  most  attractive  form 
possible.  Fourth,  the  assured  is  guaranteed  against  the  loss 
of  his  accumulated  capital,  through  failure  to  pay  premiums 
in  time  of  distress  or  unemployment,  since  the  amount  accu- 
mulated is  absolutely  untransferable  and  unattachable  on  any 
condition  whatever.  Fifth,  a  young  person  who  does  not 
earn  an  amount  sufficient  to  enable  him  to  pay  any  regular 
premiums  can  earn  the  educational,  handicraft  and  assiduity 


1910.]  HOUSE  — No.  1400.  221 

prizes,  and  by  so  doing  will  not  only  see  his  capital  increase, 
but  also  his  earning  power.  Sixth,  the  annuity  provided  is 
not  a  "  starvation  income,  which  will  barely  allow  body  and 
soul  to  cling  together,"  but  is  sufficient  "  to  insure  plenty  even 
to  a  single  person  living  alone,  and  when  two  or  more  live 
together,  which  is  almost  invariably  the  case,  then  ease,  com- 
fort and  dignity."  Seventh,  finally,  the  scheme  will  not  only 
diminish  poverty  directly,  but  will  stimulate  education,  tech- 
nical knowledge,  assiduity  in  work  and  military  service. 

This  plan  has  been  laid  before  the  British  Parliament  in  a 
bill  introduced  August  23,  1909,  the  text  of  which  is  as  fol- 
lows :  — 

COKTRIBUTORY  ANNUITIES  BiLL.  —  A  BiLL  TO  ESTABLISH  A  SySTEM  OF 

Life  Annuities  for  Persons  over  Fifty-five. 
Be  it  enacted  by  the  King's  most  Excellent  Majesty,  by  and  with 
the  advice  and  consent  of  the  Lords  Spiritual  and  Temporal,  and 
Commons,  in  this  ]H-esent  Parliament  assembled,  and  by  the  authority 
of  the  same,  as  follows:  — 

1.  The  postmaster-general  shall  establish  a  contributory  annuity 
dejiartment  for  the  purpose  of  securing  annuities  as  hereinafter  pro- 
vided for  persons  who  have  attained  the  age  of  55  years. 

2.  Every  person  of  British  nationality  who  has  attained  the  age 
of  15  years  shall  be  entitled  to  receive  an  annuity  book,  in  which 
shall  be  inscribed  the  name,  address  and  birthplace  of  such  person, 
and  the  names  and  addresses  of  his  parents. 

3.  When  the  holder  of  an  annuity  book  attains  the  age  of  55  years 
there  shall  be  deemed  to  stand  to  the  credit  of  such  person,  in  addition 
to  the  sums  contributed  by  such  person  and  any  additions  made  to 
such  sums  by  way  of  interest  or  otherwise  as  hereinafter  provided,  the 
sum  of  £30  and  any  one  or  more  of  the  following  special  grants  (that 

is  to  say)  :  — 

In  the  case  of  a  person  holding  an  elementary  education  certifi- 
cate, £5. 

In  the  case  of  a  pei'son  holding  a  technical  education  certificate,  £5. 

In  the  ca,«e  of  a  person  jiroducing  evidence  of  assiduity,  £10. 

In  the  case  of  a  person  who  has  served  in  the  navy  or  army,  £5  for 
each  year  of  such  service. 

In  the  ease  of  a  person  who  is  certified  by  the  secretary  of  state 
for  war  to  be  proficient  in  the  use  of  the  rifle,  £5. 

In  the  case  of  a  married  woman  or  widow  who  has  borne  children 
who  have  attained  the  age  of  5  years,  £5  for  each  such  child. 


222  OLD   AGE   PENSIONS.  [Jan. 

4.  Examinations  in  elementary  education  and  in  technical  education 
shall  be  held  annually  in  every  public  elementary  school  in  accordance 
with  regulations  which  shall  be  made  by  the  board  of  education  for 
this  i3urpose.  Any  person  holding  an  annuity  book  who  has  not 
attained  the  age  of  20  years  shall  be  entitled  to  attend  either  or  both 
of  such  examinations,  and,  if  he  satisfies  the  examiners,  to  receive 
an  elementary  education  certificate  or  a  technical  education  certificate 
or  both  such  certificates. 

5.  Any  person  shall  be  deemed  to  produce  evidence  of  assiduity 
who  produces  such  evidence  as  the  postmaster-general  may  require  to 
satisfy  him  that  such  person,  unless  prevented  by  sickness,  has,  be- 
tween the  ages  of  15  and  20  years,  been  in  regular  employment  or 
under  educational  instruction  for  not  less  than  ten  months  in  each 
year. 

6.  There  shall  also  stand  to  the  credit  of  any  holder  of  an  annuity 
book  when  he  attains  the  age  of  55  years  any  sums  contributed  by 
such  holder,  with  compound  interest  thereon  at  the  rate  of  4  per  cent, 
per  annum,  and  a  special  grant  equal  to  such  sums  without  interest: 
provided,  that  such  special  grant  shall  not  exceed  the  total  of  £10. 

7.  Any  holder  of  an  annuity  book  who  is  a  workman  shall  be 
entitled  to  obtain  from  his  employer  contributions  in  accordance  with 
the  schedule  of  this  act,  and  any  contributions  so  obtained  shall  be 
deemed  to  be  contributions  by  such  workman.  For  the  purposes  of 
this  section  the  words  "  workman  "  and  "  employer  "  have  the  same 
meaning  as  in  the  workmen's  compensation  act,  1906. 

8.  When  the  sums  standing  to  the  credit  of  the  holder  of  an  annuity 
book  have  reached  such  an  amount  that  the  total  sum  standing  to  his 
credit  on  attaining  the  age  of  55  years  under  the  provisions  of  this 
act  will  equal  £400,  no  further  contributions  shall  be  received  from 
such  holder,  and  any  sums  tendered  as  further  contributions  by  such 
holder  shall  be  placed  to  his  credit  in  the  Post  Office  Savings  Bank. 

9.  (1)  If  the  sums  standing  to  the  credit  of  the  holder  of  an 
annuity  book  at  the  age  of  55  years  amount  to  a  total  of  less  than 
£120,  such  holder  shall  be  entitled  only  to  receive  for  ten  years,  or 
until  his  death  if  he  dies  before  the  expiration  of  such  ten  years,  an 
annual  payment  representing  one-tenth  of  any  sums  contributed  by 
such  holder  without  interest.  (2)  If  the  sums  then  standing  to  the 
credit  of  such  person  amount  to  a  total  of  more  than  £120,  he  shall 
be  entitled  to  an  annual  payment  until  his  death  calculated  upon  such 
total  at  the  rate  of  5V2  per  cent,  per  annum  until  he  attains  the  age 
of  65  years,  and  thereafter  at  the  rate  of  11  per  cent,  per  annum. 

10.  Every  assignment  of,  or  charge  on,  and  every  agreement  to 
assign  or  charge,  an  aiinuity  under  this  act  shall  be  void;  and  on  the 
bankruptcy  of  a  person  entitled  to  an  annuity  such  annuity  shall  not 
pass  to  the  trustee  or  other  person  acting  on  behalf  of  the  creditoi's. 


1910.]  HOUSE  — No.  1400.  223 

11.  The  postmaster-general,  in  conjunction  with  the  local  govern- 
ment boai'd,  may  make  regulations  for  carrying  this  act  into  effect. 

12.  Unless  moneys  shall  be  i^rovided  by  Parliament  for  the  purpose, 
any  expenses  incurred  in  carrying  this  act  into  effect  shall  be  de- 
frayed in  the  case  of  each  annuitant  by  the  rating  authority  of  the 
district  within  which  such  annuitant  is  resident.  Any  difference 
between  the  postmaster-general  and  any  rating  authority  with  regard 
to  the  interpretation  of  this  section  shall  be  referred  to  the  local 
government  board,  whose  decision  shall  be  final. 

13.  This  act  shall  come  into  operation  on  the  first  day  of  Jan- 
uary 1910. 

14.  This  act  may  be  cited  as  the  contributory  annuities  act,  1909. 


224  OLD   AGE   PENSIONS.  [Jan. 


V. 

THE  GENEEAL  QUESTION  OF  OLD  AGE   PEN- 
SIONS AND  INSURANCE. 


1.     Analysis  of  Existing  and  Proposed  Schemes. 

The  various  plans  of  old  age  pensions  and  insurance  which 
have  been  adopted  or  pro^josed  thus  far  may  be  reduced,  on 
final  analysis,  to  six  main  types :  — 

(a)     Universal  Non-contributory  Pension  Schemes. 

This  type  of  scheme  is  associated  with  the  names  of  Charles 
Booth  of  London  and  the  late  Edward  Everett  Hale  of  Bos- 
ton, —  the  most  prominent  advocates  of  universal  non-con- 
tributory pensions. 

The  scheme  proposed  by  Mr.  Booth  calls  for  a  grant  of  a 
pension  of  7s,  a  week  to  every  person  70  years  of  age  and 
over.  Mr.  Booth  would  exclude  aliens,  and  possibly  certain 
other  ineligibles,  from  the  benefits  of  the  pension  system,  but 
remarks  that  it  is  unnecessary  to  burden  the  statement  of  his 
scheme  with  these  details.  Practically,  the  plan  is  universal 
in  its  application,  and  is  wholly  non-contributory.  Any  per- 
son claiming  to  be  70  years  of  age  and  entitled  to  a  pension 
would  take  out  an  application  with  the  registrar  of  the  dis- 
trict in  which  he  lived.  The  latter  would  forward  this  ap- 
plication to  his  superintendent,  who  would  investigate  and 
report  upon  it.  If  the  application  were  allowed,  the  pen- 
sioner would  then  be  provided  with  a  certificate  of  identity 
and  a  pension  book,  which  would  enable  him  to  draw  his  al- 
lowance weekly  at  a  local  post  office. 

The  plan  proposed  by  the  late  Edward  Everett  Hale  was 
similar  to  that  of  Mr.  Booth.  Every  citizen,  man  and 
woman,  over  69  years  of  age,  was  to  be  paid  a  pension  of 
$100  a  year.  The  cost  of  the  scheme  was  to  be  met  out  of 
the  proceeds  of  the  State  poll  tax.     It  was  Dr.  Hale's  opin- 


1910.]  HOUSE  — No.  1400.  225 

ion  that,  if  the  expense  of  a  pension  scheme  were  provided 
for  in  this  way,  the  citizens  who  paid  a  poll  tax  wonld  feel 
no  discredit  attaching  to  the  receipt  of  a  pension,  since  they 
wonld  themselves  provide  the  fnnds  out  of  which  the  pen- 
sions would  be  paid.  The  j)ayment  of  an  old  age  pension 
of  $100  each  to  every  citizen  who  had  passed  the  age  of  69 
years  would  not,  in  Dr.  Hale's  opinion,  involve  a  heavy 
burden  upon  the  State. -^ 

(b)     Partial  Non-contributory  Schemes. 

This  type  of  scheme  is  embodied  in  the  old  age  pension 
acts  of  Great  Britain  and  Australia.  The  application  of  the 
British  and  Australian  systems  of  old  age  pensions  is  re- 
stricted to  the  deserving  aged  poor. 

The  British  act  provides  for  the  payment  of  pensions,  not 
exceeding  5s.  weekly,  to  persons  70  years  of  age  and  over, 
but  excludes  from  the  benefits  of  the  scheme  the  following 
classes :  persons  who  have  lived  in  the  United  Kingdom  less 
than  twenty-five  years;  persons  whose  yearly  incomes  ex- 
ceed £31  10s.;  persons  in  receipt  of  poor  relief;  persons  who 
have  failed  to  work  according  to  their  ability  to  maintain 
themselves  and  their  dependents  ;  inmates  of  lunatic  asylums  ; 
and  persons  convicted  of  a  prison  ofi'ence.  The  scheme  is 
wholly  non-contributory,  the  expenses  being  paid  out  of 
"  money  provided  by  Parliament." 

The  Australian  system  is  similar  in  principle  to  the  Brit- 
ish plan,  the  main  differences  being  that  the  pensionable  age 
is  lower,  namely,  65  years ;  and  the  amount  of  the  pension  is 
larger,  namely,  10s.  per  week.  The  conditions  of  eligibility 
laid  down  in  the  act  are:  no  person  may  receive  a  pension 
unless  he  has  lived  in  Australia  continuously  for  twenty-five 
years  prior  to  the  date  of  the  application;  is  of  good  moral 
character;  has  led  a  temperate  and  reputable  \\io  for  five 
years  preceding;  has  not  deserted  husband,  wife  or  children; 
and  does  not  o^\ti  property  of  more  than  £310  in  vnhio; 
aliens,  subjects  naturalized  less  than  three  years,  Asiatics 
and  aboriginal  natives  are  also  disqualified.  The  pensions 
are  paid  out  of  the  general  treasury. 

'  For  an  estimate  of  the  cost  of  universal  pension  schemes,  as  proposed  by  Dr.  Hale, 
see  p.  261. 


226  OLD  AGE   PENSIONS.  [Jan. 

(c)  Compulsory  Contributory  Insurance,  with  State  Subsidy. 
This  is  the  type  of  scheme  adopted  by  Germany.  The 
insurance  is  compulsory  on  all  wage  earners,  and  on  salaried 
persons  whose  yearly  income  does  not  exceed  2,000  marks. 
The  scheme  is  founded  on  the  principle  of  obligatory  insur- 
ance of  working  people,  with  assistance  by  employer  and 
State.  Participation  in  the  plan  begins  with  the  completed 
sixteenth  year.  The  pension  is  paid  at  the  age  of  70.  The 
contributions  by  the  insured  are  graded  according  to  the 
amount  of  the  wages  or  salary  in  each  case.  The  contribu- 
tion is  divided  equally  between  the  employer  and  the  em- 
ployed. The  State  pays  the  expenses  of  administration,  and 
in  addition  contributes  to  each  pension  a  fixed  sum.  This 
method  of  dividing  the  burden  works  out  in  practice  so  that 
about  one-third  of  the  total  expense  is  borne  by  the  State,  by 
employers  and  by  employed  respectively.  The  amount  of  the 
pensions  is  small,  the  maximum  allowance  not  exceeding  $60 
per  year. 

(d)  Voluntary  Contributory  Insurance,  with  State  Subsidy. 
This  is  the  plan  embodied  in  the  Belgian  old  age  pension 
act.  It  is  a  scheme  for  subsidizing  thrift  by  means  of  a 
State  contribution  to  insurance  funds  provided  through  in- 
dividual savings.  The  object  is  to  put  a  premium  on  saving 
for  old  age.  Participation  in  the  scheme  is  optional.  The 
pension  is  payable  at  the  age  of  60 ;  the  amount  is  $72.  The 
plan  is  administered  through  a  superannuation  fund  bank, 
maintained  by  the  State.  Citizens  may  insure  themselves, 
making  contributions  to  this  bank;  the  State  then  pays  a 
bonus  or  premium  on  the  amount  contributed  by  the  indi- 
vidual. This  scheme  of  assisted  insurance  is  supplemented 
in  Belgium,  it  should  be  added,  by  a  system  of  non-contribu- 
tory pensions. 

(e)    Voluntary  Insurance  under  Public  Administration. 
This  system  has  been  adopted  in  Massachusetts  through 
the   savings   bank   insurance    act  of   1907,    and   in   Canada 
through  the  government  annuities  act  of  1908.     The  under- 


1910.]  HOUSE  — No.  1400.  227 

lying  principle  of  these  two  measures  is  essentially  the  same. 
Both  schemes  provide  for  the  sale  of  insurance  and  annui- 
ties at  cheap  rates,  under  a  governmental  guarantee.  In  the 
Canadian  scheme  the  sales  are  made  directly  through  a 
government  department;  in  the  Massachusetts  scheme,  in- 
directly through  the  medium  of  the  savings  banks.  The 
system  ditiers  from  the  Belgian  plan  of  voluntary  contribu- 
tory insurance,  in  that  the  State  pays  no  direct  subsidy  to  the 
insurance  funds.  There  is  a  small  subsidy  by  the  State,  in 
the  form  of  the  expenses  of  administration.  The  aim  of  this 
scheme  of  voluntary  insurance  is  to  make  the  facilities  for 
saving,  especially  against  old  age,  numerous,  accessible  and 
attractive  to  vrorking  people.  The  amount  of  the  insurance  is 
limited  in  Canada  to  $600,  in  Massachusetts  to  $500 ;  and 
the  amount  of  the  annuity  in  Canada  to  $50,  and  in  Massa- 
chusetts to  $200.  Opportunity  is  afforded  to  employers  to 
co-operate  with  their  working  people  in  providing  insurance 
or  annuities,  by  making  contributions  toward  the  payment 
of  i^remiums  or  assisting  in  the  collection  of  the  latter. 

(f)  Voluntary  Insurance  under  Private  Management. 
This  method  of  dealing  with  the  pension  and  insurance 
question  is  illustrated  by  the  industrial  insurance  offered  by 
private  insurance  companies,  and  the  retirement  and  pension 
systems  established  by  employers  of  labor.  ISTo  State  action 
is  involved  here  except  in  the  form  of  supervision.  In  case 
of  the  schemes  established  by  employers,  each  industrial 
group  provides  for  its  own  insurance  through  a  contributory 
or  non-contributory  scheme.  The  system  in  such  cases  is 
usually  non-contributory.  Industrial  insurance  is  a  business 
proposition,  pure  and  simple.  It  represents  private  enter- 
prise applied  to  the  solution  of  the  problem  of  old  age  in- 
surance. 

2.     Fundamental  Questions  of  Pkinciple  involved  in 

Old  Age  Pension  Problem. 

The  admitted  need  of  some  system  of  provision  for  the 

support  of  old  age  through  pensions,  insurance  or  annuities, 

public  or  private,  is  conceded  by  all  persons  who  have  made 


228  OLD   AGE   PENSIONS.  [Jan. 

a  serious  study  of  this  question.     Two  considerations  are  im- 
portant, as  showing  this  need. 

In  the  first  place,  there  is  the  distressing  spectacle  of  pau- 
perism in  old  age.     It  was  this  that  first  gave  rise  to  the  agi- 
tation for  pensions  in  England  a  generation  ago.     The  men 
who  first   agitated   the  pension   idea   in  that  country  were 
shocked   by  the   alarming  extent  of  destitution   among   the 
aged.     In  the  second  place,  there  is  the  problem  of  industrial 
superannuation.     The  changed  conditions  of  industrial  life 
have  forced  this  problem  to  the  foreground.     The   average 
period  of  employment  has  been  shortened  by  the  increasing 
use  of  machinery  and  the  growing  stress  of  competition,  which 
result  in  the  retirement  of  workers  at  an  earlier  age.     At  the 
same  time,   the  average  duration  of   human  life  has  been 
lengthened  by   scientific  hygiene    and   improved   sanitation. 
Thus,  the  period  of  non-productive  existence  at  the  end  of 
life  has  been  extended  from  both  ends,  through  the  earlier 
retirement  of  workers  and  through  the  lengthening  of  human 
life  itself.     It  may  be  expected  that  these  conditions,  which 
have  made  the  problem  of  industrial  superannuation  a  press- 
ing one,  will  become  more  rather  than  less  potent  in  the  fu- 
ture.    The  problem  is  destined  to  become  increasingly  urgent. 
The  general  question  of  old  age  pensions  must  at  this  point 
be  analyzed  or  dissected,  for  the  purpose  of  further  discus- 
sion.    The  various  plans  for  the  solution  of  the  problem  of 
old  age  support  which  have  been  tried  or  proposed  involve 
widely   different   principles   and   methods.     The   first   issue 
that  arises  in  passing  upon  principles  and  methods  of  solu- 
tion is,  Should  the  plan  be  contributory  or  non-contributory  ? 
That  is,  should  the  expense  be  borne  in  whole  or  in  part  by 
the  beneficiaries,  in  the  form  of  contributions  to  pension  or 
insurance  funds,  or  should  the  cost  be  defrayed  entirely  by 
the   State,   through  general  taxation?     If  the   contributory 
principle  be  chosen,  then  the  further  question  arises,  Should 
participation  in  the  plan  be  compulsory  or  voluntary  ?     That 
is,  should  individuals  be  left  entirely  free  to  take  advantage 
of  the  system  of  pensions  or  insurance  provided,  or  should 
they  be  compelled  to  take  part  in  the  scheme  ?     If,  however, 
the  non-contributory  principle  be  chosen,  the  matter  of  com- 


1910.]  HOUSE  — No.  1400.  229 

pulsion  does  not  call  for  consideration,  because  it  is  evident 
that  every  one  who  really  needed  such  aid  wovild  apply 
for  a  pension  under  any  non-contributory  system.  Finally, 
whether  the  plan  be  contributory  or  non-contributory,  this 
further  question  comes  up  for  consideration,  Should  the  in- 
surance or  pension  scheme  be  universal  or  partial  ?  That  is, 
should  the  benefits  be  extended  to  all  without  restriction,  or 
should  they  be  confined  to  certain  persons  who  meet  specified 
conditions  of  eligibility  ? 

(a)     The  Question  of  Contributory  versus  Non-contributory  Pensions. 

The  non-contributory  principle  was  the  one  advocated  by 
the  pioneers  of  the  pension  movement  in  England.  The 
schemes  of  non-contributory  pensions  are,  furthermore,  the 
most  popular  at  the  present  time.  The  arguments  in  favor 
of  adopting  the  non-contributory  principle  as  the  basis  of 
any  scheme  that  is  devised  may  be  grouped  as  follows :  — 

1.  It  is  impossible,  through  any  contributory  system,  to 
reach  the  class  of  poorest  paid  workers,  which  includes  those 
most  in  need  of  old  age  support.  The  members  of  this  class 
cannot  save  enough  to  contribute  to  pension  funds.  This 
view  was  stated  in  a  pamphlet  published  in  1879,  by  Mr. 
E.  P.  Ilookham  of  Islip,  Oxfordshire,  Eng.     He  wrote: — • 

I  shall  first  take  u))  a  iiosition  Avhicli  I  believe  cannot  be  practically 
controverted:  that  under  existing'  circumstances  it  is  impossible  for 
the  laboring  poor  —  and  I  have  in  view  more  especially  the  agricul- 
tural pocr,  having  been  in  immediate  contact  with  that  class  —  it  is 
impossible,  I  say,  for  even  the  best-conducted  of  these  to  lay  by  a 
sufficient  provision  for  their  support  in  old  age.  .  .  .  This  ought  not 
to  be,  for  I  maintain  that  every  good  citizen,  having  contributed  to 
the  wealth  of  his  country,  is  entitled  to  an  honorable  maintenance 
from  it,  when  no  longer  able,  from  old  age,  to  add  further  to  that 
])rosi)erity.' 

It  is  even  maintained  that,  in  general,  the  members  of  the 
workiug  class  do  not  now  receive  a  living  wage,  and  conse- 
(lucntly  are  not  able  to  contribute  to  a  })ension  scheme;  any 
]ilan  that  is  adopted  must,  therefore,  be  non-contributory. 

•1.  It  is  the  duty  of  the  State  to  take  care  of  the  needy 
aged.     This  obligation   is  recognized   and   embodied  in   the 


1  H.  p.  Ilookham,  "  Outlines  of  a  Scheme  for  Dealing  with  Pauperism."  p.  72. 


230  OLD  AGE   PENSIONS.  [Jan. 

present  system  of  poor  relief.  It  should  be  discharged,  how- 
ever, in  a  more  considerate  and  liberal  manner  than  under 
the  present  system.  The  method  of  providing  for  dependent 
aged  persons  in  almshouses  is  declared  to  be  harsh  and  cruel ; 
it  subjects  respectable  aged  persons  to  contaminating  and 
degrading  associations.  The  present  system  of  poor  relief 
brands  old  age  pauperism  with  a  stigma.  It  is  urged  that 
a  system  of  pensions,  granted  as  a  right  to  all  aged  persons, 
should  be  adopted  as  a  means  of  removing  this  stigma,  and 
providing  in  an  enlightened  and  humane  fashion  for  the  de- 
serving aged  poor.  Mr.  Charles  Booth  holds  that  the  claim 
of  the  old  to  pensions  granted  as  a  right,  not  as  a  charity,  is 
especially  strong  in  the  case  of  women. 

It  is  held  that  those  who  have  worked  for  a  lifetime  have  a  claim 
to  something  more  than  social  charity,  and,  however  this  argument 
may  he  regarded  as  to  men,  it  has  considerable  force  with  respect  to 
women,  who  have  often  spent  lives  of  the  most  active  and  invaluable 
citizenshijD,  without  ever  having  the  smallest  opportunity  for  saving. 
Their  husbands  give  them  from  their  wages  the  sum  they  think  neces- 
sary for  current  expenses  of  the  household,  and  expect  a  very  full 
quid  pro  quo  in  solid  comfort.  Men  often  die  leaving  an  elderly 
widow  entirely  destitute,  or  with  little  more  than  enough  coming  from 
some  friendly  society  to  defray  her  husband's  funeral  expenses;  and 
there  may  or  may  not  be  children  able  or  willing  to  give  their  mother 
a  home.^ 

3.  The  aged  worker  has  really  made  contributions  to  the 
public  funds  from  which  so-called  non-contributory  pensions 
would  be  paid,  through  payment  of  taxes  and  through  service 
in  the  industrial  army.  Mr.  Lloyd  George  stated  this  view 
of  the  case  as  follows :  — 

As  long  as  you  have  taxes  upon  commodities  which  are  consumed 
practically  by  every  family  in  the  country,  there  is  no  such  thing  as 
a  non-contributory  scheme.  .  .  .  Again,  the  worker  who  has  con- 
tributed by  his  strength  and  his  skill  to  the  increase  of  the  national 
wealth,  has  made  his  contributions  to  the  fund  from  which  his  pension 
is  to  come  when  he  is  no  longer  able  to  work. 

4.  The  expense  of  a  pension  system  would  be  largely  off- 
set by  the  reduction  in  outlay  for  poor  relief  that  would 

1  Charles  Booth,  "  Pauperism  and  the  Endowment  of  Old  Age,"  p.  168. 


1910.]  HOUSE  — No.  1400.  231 

follow  upon  the  adoption  of  snch  a  plan.  The  establish- 
ment of  a  pension  system  is  expected  to  reduce  greatly,  if  not 
abolish  altogether,  the  expenditure  for  almshouses  and  char- 
ity. Mr.  Charles  Felton  Pidgin,  former  chief  of  the  Massa- 
chusetts Bureau  of  Statistics  of  Labor,  presented  this  financial 
argument  for  pensions  in  the  annual  report  of  the  Bureau 
for  1005.  He  estimated  that  the  amount  expended  in  this 
State  by  cities,  towns,  individuals  and  corporations  for  chari- 
table purposes  in  the  year  1900  was  $9,580,551.51.  He  fur- 
ther estimated  the  amount  required  to  pay  pensions  of  $260 
per  annum  to  one-fifth  of  the  population  65  years  of  age  and 
over  to  be  $7,441,561:,  basing  this  estimate  on  the  assumption 
that  only  one  person  in  five  would  apply  for  a  pension.  He 
concluded,  therefore :  — 

The  amount  required  to  pay  an  annual  pension  of  $260  to  one-fifth 
of  the  persons  in  the  State  65  years  of  age  or  over  is  $2,138,987.51 
less  than  was  contributed  in  the  year  1900  by  the  cities  and  towns  and 
by  individuals  and  corporations  for  charitable  purposes.  If  this  plan 
were  adopted,  cities,  towns,  and  individuals  and  corporate  societies 
would  be  free  from  collecting  and  distributing  money  for  charitable 
purposes.* 

5.  The  payment  of  even  small  pensions  to  old  persons 
would  help  keep  families  together.  It  would  make  it  pos- 
sible for  the  children  to  retain  the  aged  parent  in  the  house- 
hold, through  the  addition  that  his  pension  would  bring  to 
the  family  income.  The  late  Dr.  Edward  Everett  Hale  put 
this  argument  as  follows :  — 

What  you  want  is  that  a  man's  children  should  be  glad  to  have 
grandpa  in  the  home,  and  a  pension  of  $3  a  Aveek  would  give  you 
that.  The  aged  person  could  always  find  some  family  that  wanted  to 
take  care  of  him,  if  he  had  that  amount.  Grandpa  would  make 
himself  a  very  popular  person  at  home.  But  as  it  stands  now,  he 
is  not  wanted  there;  they  send  him  off  to  some  other  place." 

6.   The  establishment  of  a  non-contributory  pension  system 
would  create  a  sense  of  well-being,  hopefulness  and  ambition 

1  Report  of  the  Massachusetts  Bureau  of  Statistics  of  Labor,  1905,  p.  144. 

2  Dr.  Edward  Everett  Hale,  testimony  before  Massachusetts  Commission  on  Old  Age 
Pensions,  June  3,  1908. 


232  OLD   AGE   PENSIONS.  [Jan. 

in  the  ranks  of  the  working  class,  and  would  thus  increase  in- 
dividual saving.  Prof.  Henry  E.  Seager  contends  that  the 
British  pension  act  of  1908  will  "  not  only  add  tons  to  the  sum 
of  human  happiness,  but,  what  is  more,  will  quicken  the  de- 
velopment of  that  s]3irit  of  independence  and  self-help  which 
lies  at  the  basis  of  all  true  progress."  He  argues  as  fol-. 
lows :  — 

The  most  serious  obstacle  to  saving  and  accumv;lating  property 
for  the  more  jooorly  jiaid  groups  of  wage  earners  is  the  apparent 
hopelessness  of  the  undertaking.  It  is  true  that  the  poverty  of  the 
poor  is  in  part  due  to  improvidence;  but  it  is  also  true  that  poverty 
itself  is  one  of  the  chief  causes  of  improvidence.  Any  change  that 
will  increase  the  feeling  of  security  and  confidence  with  which  wage 
earners  contemplate  the  future  will  tend  to  cause  them  to  make 
rational  provision  for  the  future.  Thus  the  guarantee  of  necessaries 
for  all  respectable  wage  earners  after  the  seventieth  year  can  hardly 
fail,  it  seems  to  me,  to  stimulate  many  of  them,  who  now  make  no 
provision  for  old  age,  to  try  to  accumulate  enough  to  afford  at  least 
the  annual  income  of  $105,  which  may  be  enjoyed  under  the  British 
law  without  any  diminution  in  the  pension  paid  by  the  State.  But 
saving  with  a  view  to  providing  for  future  needs  is  a  habit  which, 
once  acquired,  is  certain  to  persist,  even  after  the  goal  which  orig- 
inally incited  it  has  been  attained.  Of  those  who  save  in  order  that 
they  may  be  assured  some  comforts,  their  necessaries  being  assured 
through  the  State,  many  will  accumulate  enough  to  render  themselves 
independent  of  State  aid.  On  these  grounds,  I  believe  that  the  new 
l^olicy,  far  from  discouraging  thrift  and  forethought,  will  tend  on  the 
whole  to  encourage  them.^ 

The  arguments  against  the  non-contributory  princij^le  and 
in  favor  of  the  contributory  may  be  classified  thus :  — 

1.  The  cost  of  non-contributory  pensions  would  be  enor- 
mous. This  objection  in  itself  is  held  to  be  well-nigh  pro- 
hibitive. Mr.  Booth  himself  estimated  the  cost  of  his  scheme 
of  universal  and  non-contributory  pensions  for  persons  70 
years  of  age  and  over  at  about  $80,000,000  for  the  first  year. 
The  present  British  system  of  non-contributory  pensions  cost 
about  $40,000,000  for  the  first  year.  The  expense  of  pro- 
viding a  pension  of  $200,  without  contributions,  for  persons 
70  years  of  age  and  over  in  Massachusetts  would,  if  all  ]wy- 

i  Prof.  Henry  E.  Seager,  article  in  "Charities  and  Commons,"  October  3,  1908. 


1910.]  HOUSE  — No.  1400.  233 

sons  of  that  age  were  included,  be  $21,000,000,  as  the  present 
population  over  70  years  of  age  numbers  105,000.  The  ex- 
pense of  providing  a  pension  of  that  amount  for  only  one-half 
of  the  pensionable  population  70  years  of  age  and  over,  that 
is,  52,500  persons,  would  be  $10,500,000.  If  the  pension- 
able age  were  made  65,  instead  of  70,  these  figures  would  of 
course  be  greatly  increased. 

2.  The  non-contributory  scheme  is  unjust  in  principle. 
It  involves  taxation  of  the  rich  for  the  benefit  of  the  poor. 
It  is  class  legislation.    The  Hon.  W.  E.  H.  Lecky  declares :  — 

There  is  no  real  ground  for  the  assertion  that  because  an  indus- 
trious man  has  failed  to  earn  a  sufficiency,  he  has  a  moral  right  to  be 
rewarded  for  his  industry  out  of  the  proceeds  of  a  tax  le\^ed  upon 
his  neighbors,  to  whom  he  has  rendered  no  service,  or  none  which  has 
not  been  paid  for  in  wages.*  \ 

3.  The  effect  on  individual  character  would  be  debilitat- 
ing; the  non-contributory  scheme  puts  a  premium  on  thrift- 
lessness.  Its  adoption  would  be  disastrous  to  the  voluntary 
agencies  for  the  encouragement  of  saving,  such  as  the  benefit 
orders.  This  argument  has  been  forcefully  stated  by  Mr. 
Erederick  L.  Hoffman,  as  follows :  — 

A  non-contributory  old  age  pension  scheme  will  not  solve  the  prob- 
lem of  the  dependent  poor,  and  will  not  prevent  an  increase  in  the 
burden  of  real  pauperism;  but,  on  the  contrary,  it  will  undermine 
and  tend  to  destroy  the  self-respecting  character  of  our  people  as 
citizens  of  a  democracy  where  economic  independence,  achieved  by 
individual  effort,  self-sacrifice  and  self-denial,  is.  after  all,  the  only 
aim  worth  while.  However  much  we  may  be  inclined  to  permit  our- 
selves to  be  deceived  by  specious  arguments  of  guesswork  philan- 
thropy into  believing  that  the  gift  is  to  help  the  recipient  and  not  to 
hinder,  such  gifts,  with  rare  exceptions,  are  opposed  to  the  princii)les 
of  character-building  and  of  character-maintenance  throughout  all 
the  years  which  constitute  the  span  of  human  life.  .  .  .  Hold  out  the 
prospect  that  such  effort  is  not  necessary,  that  earnings  may  be  squan- 
dered for  a  thousand  and  one  needless  purposes,  that  restraint  upon 
family  exjienditures  is  not  required,  and  the  most  powerful  incentive 
which   makes   for   character   and   growth   in   a   democracy   is   taken 


awav. 


I  HoTi.  W.  E.  II.  Lecky,  in  "  Olil  .\ge  Pensions:  Collection  of  Short  Papers,"  1903, 
p.  103. 


234  OLD   AGE   PENSIONS.  [Jan. 

State  pensions  in  old  age  will  not  solve  the  problem  of  poverty 
and  pauperism,  or  economic  dependence;  but,  on  the  contrary,  such 
pensions  will  materially  undennine  the  thrift  function  at  every  period 
of  life.  English  experience  has  been  to  the  effect  that  the  prospect 
of  a  government  pension  in  old  age  has  prevented  large  numbers  from 
becoming  subscribers  to  the  voluntary  superannuation  funds  of 
friendly  societies;  and  there  is  no  reason  to  suppose  that  the  experi- 
ence in  this  country  would  not  be  identical,  and  aifect  all  the  various 
lines  of  voluntary  savings,  investments  and  insurance.^ 

4.  The  effect  on  the  family  would  be  disintegrating.  It 
would  cause  children  to  withdraw  the  support  which  they 
now  give  to  aged  parents.  There  would  follow  a  general 
loosening  and  breaking  of  family  ties. 

Prof.  Francis  G.  Peabody  speaks  as  follows  of  this  ten- 
dency :  — 

In  many  parts  of  New  England,  especially  in  rural  districts,  the 
family  life  is  largely  regulated  by  the  proposed  care  of  old  age;  that 
is  to  say,  a  man  and  wife  raise  a  family  of  children,  and  as  they  gTow 
old  the  son  or  daughter  marries  and  takes  the  farm,  and  the  son  and 
his  wife  and  the  daughter  and  her  husband  all  live  with  the  old  people. 
It  is  a  New  England  system.  The  tendency  of  the  pension  system  is 
likely  to  break  up  in  some  degree  the  dependency  of  family  life, 
and  lessen  the  self-resj)ect  of  all  New  England  citizens." 

Miss  Alice  L.  Higgins,  secretary  of  the  Associated  Chari- 
ties of  Boston,  states  this  objection  in  the  following  words :  — 

The  main  question,  however,  to  my  mind,  is  the  effect  of  a  jDension 
system  on  the  health,  character  and  unity  of  family  life.  I  hope  we 
are  to  continue  to  consider  the  family  as  the  unit  of  society,  and  to  me 
the  most  serious  objection  to  the  system  is  that  it  takes  the  individual 
as  the  unit  instead  of  the  family.  We  are  all  dependent  in  infancy 
and  childhood.  Why  should  not  the  State  take  care  of  us  then? 
Because  we  are  children  in  a  family,  belong  to  it,  and  our  parents 
are  responsible.  When  they  fail  in  this  normal  responsibility,  the 
State,  through  its  private  benevolence  or  public  charitable  arm,  pro- 
vides for  these  exceptional  cases.  In  old  age  again  we  may  be 
dependent;  still,  are  we  not  members  of  a  family?  Is  there  not  filial 
responsibility,  and  has  it  not  been  a  factor  in  the  development  of  the 
race?    Where  filial  responsibility  fails,  or  family  responsibility,  why 

1  Quarterly  publications  of  the  American  Statistical  Association,  March,  1909;   article, 
"State  Pensions  and  Annuities  in  Old  Age,"  by  F.  L.  Hoffmann,  pp.  367,  36S,  3S6,  387. 

2  Prof.  Francis  G.  Peabody,  testimony  before  commission,  1908,  p.  6. 


1910.]  HOUSE  — No.  1400.  235 

should  not  private  benevolence  and  public  charity  provide  for  the 
exceptions?  Childhood  cannot  make  provision  for  its  dependency, 
obviously,  yet  that  case  is  left  to  the  family.  In  a  society  that  has 
opened  all  the  doors  of  opportunity  to  its  members,  old  age  can,  in 
the  main,  be  provided  for  by  one's  own  industry  and  thrift,  or  in 
the  care  of  one's  children.  The  effect  of  such  a  pension  system  on 
children  and  grandchildren  must  be  carefully  weighed.  The  spirit- 
uality of  famih'  life  can  be  interfered  with  only  at  peril  to  the 
nation.* 

5.  The  grant  of  gratuitous  subsidies  to  aged  memlDers  of 
the  working  class  would  tend  to  lower  the  rate  of  wages. 
This  would  follow  not  merely  through  the  direct  competition 
of  pensioned  workers,  who  would  be  able  to  underbid  the 
prevailing  rate  in  the  occupations  in  which  they  were  en- 
gaged, but  through  the  indirect  influence  of  the  prospect  of 
a  subsidy  in  old  age,  which  would  lead  workers  to  accept  less 
in  regular  wages  than  they  would  otherwise  be  disposed  to 
demand.  On  this  question  the  British  Committee  on  Old 
Age  Pensions,  1898,  reported  as  follows:  — 

Will  a  State-aided  pension  system  affect  the  wage  rate?  It  must 
not  be  forgotten  that  the  earnings  of  the  workman  dependent  on 
wages  have  to  jirovide  for  his  support  not  only  during  the  period 
of  his  actual  employment,  but  also  for  his  age  when  he  is  past  work, 
and  that  this  consideration  affects  the  rate  of  his  wages.  But  if  the 
whole  or  a  part  of  the  cost  of  supporting  him  when  past  work  is 
undertaken  by  the  State,  the  portion  of  the  wage  applicable  to  this 
service  ceases  to  be  an  essential;  and,  whenever  the  competition  for 
emplojTnent  is  keen,  the  wage  pajTnent  will  tend  to  fall  by  a  per- 
centage approximating  to  that  contributed  by  the  State  to  the  pension 
fund.  The  difficulty  appears  in  a  different  form  when  the  power  of 
the  aged  to  contribute  to  their  means  of  support  by  light  labor  is 
considered.  A  man  or  woman  subsidized  by  the  grant  of  a  State 
pension  is  in  a  position  to  underbid  a  competitor  who  has  no  resource 
but  his  or  her  actual  earnings,  or  the  rates.  The  difficulty  is  of  very 
wide  application,  and  cannot  be  disregarded  in  considering  the  effects 
of  a  State-aided  pension  system  on  the  welfai-e  of  the  industrial 
classes.  To  obviate  the  diflficulty,  an  attempt  might  probably  be 
made  to  prohibit  all  recii)ients  of  State-aided  pensions  from  engaging 
in  remunerative  work  of  any  kind.  Such  an  attempt  must  assuredly 
fail ;  but,  even  if  it  could  succeed,  it  would  have  the  effect  of  creating 


Miss  Alice  L.  Higgins,  testimony  before  commission,  September  25,  1908. 


236  OLD   AGE    PENSIONS.  [Jan. 

a  compulsorily  unoccupied  class,  with  doubtful  advantage  to  them- 
selves or  the  community.^ 

The  Hon.  W.  E.  H.  Leekj,  who  was  a  member  of  the 
British  Committee  on  the  Aged  Deserving  Poor  of  1899, 
emphasized  the  unfavorable  effect  of  gratuitous  pensions  on 
wages  very  strongly :  — 

All  experience  shows  that  where  a  pension  is  attached  to  a  particu- 
lar employment,  the  rate  of  wages  in  it  is  greatly  below  what  would 
otherwise  have  been  the  market  rate.  It  seems  to  me  scarcely  doubtful 
that  a  general  pension  system  would  have  a  similar  effect.  The  Ger- 
man system  of  throwing  part  of  the  cost  directly  on  the  employer 
naturally  leads  him  to  make  it  his  first  object  to  reduce  wages  suffi- 
ciently to  compensate  him  for  the  expenditure.  Even  if  the  influence 
of  old  age  pensions  in  depressing  wages  was  not  directly  felt  in 
England  in  the  earlier  years  of  a  working-class  life,  it  would  at  least 
be  felt  indirectly  in  retarding  their  natural  rise,  and  it  would  be 
directly  and  severely  felt  when  the  prime  of  life  was  past  and  the 
period  of  obtaining  a  pension  drew  near.  The  conditions  of  modern 
industry  already  press  heavily  on  men  between  55  and  65.  It  can 
hardly  be  doubted  that  an  old  age  pension  in  prospect  would  during 
these  years  aggravate  their  condition.  I  have  already  dwelt  upon  the 
injustice  of  the  proposals  that  have  been  made  for  depriving  those 
who  had  attained  a  pension  of  the  right  of  working  for  wages.  If, 
on  the  other  hand,  they  were  permitted  to  do  so,  the  pensioner  could 
easily  underbid  his  competitors  in  the  market,  especially  those  who 
were  not  greatly  below  him  in  age." 

Another  opponent  of  the  pension  policy  puts  the  wages 
argument  tersely,  as  follows :  — 

The  next  point  to  be  observed  is  that  old  age  pensions,  like  every 
other  form  of  relief,  must  act  in  sui3plementation  of  wages.  It  is 
impossible  to  divide  the  life  of  anj^  human  being  into  water-tight 
compartments  of  under  65  and  over  65,  or  whatever  the  age  limit 
fixed  for  the  moment  may  be.  If  a  man  is  relieved  from  the  necessity 
of  providing  for  his  old  age,  he  will  inevitablj^  in  the  long  run  be 
foi'ced  to  take  lower  wages  during  his  working  life.' 

6.  The  reduction  in  the  expenditure  for  poor  relief,  pre- 
dicted to  follow  upon  the  adoption  of  a  pension  system,  would 

1  Report  of  British  Committee  on  Old  Age  Pensions,  1898. 

2  Hon.  W.  E.  H.  Lecky,  in  "Old  Age  Pensions,"  p.  111. 
'  "Old  Age  Pensions,"  pp.  15,  16. 


1910.]  HOUSE  — No.  1400.  237 

not  be  forthcoming.     A  British  investigating  committee  of 
1903  reported :  — 

That  the  retluction  of  poor  law  expenditure  will  be  considerably 
less  than  has  often  been  represented,  inasmuch  as  the  proportion  of 
tlie  aged  poor  who  are  now,  or  may  in  future  be,  in  the  workliouses, 
who  could  with  ad\-antage  to  themselves  live  outside  with  the  help  of  a 
pension,  will  probably  be  found  to  be  very  small.^ 

There  is  no  evidence  whatever  that  the  adoption  of  a  pen- 
sion system  has  had  this  effect  in  any  country  in  which  the 
plan  has  been  tried.  On  the  other  hand,  the  experience  of 
the  British  Australasian  colonies  and  of  Denmark  goes  to 
show  that  the  expenditure  for  poor  relief  increases  under  the 
pension  policy. 

7.  The  grant  of  pensions  would  give  undesirable  encour- 
agement to  immigration.  This  objection  is  urged  as  espe- 
cially important  in  its  bearing  on  the  question  of  adopting 
the  pension  policy  in  any  American  State.  It  is  held  that 
the  effect  would  be  to  invite  immigi-ation  from  outside  the 
State,  and  thus  to  overcrowd  the  labor  market  and  to  depress 
the  wage  rate.  The  undesirable  stimulus  to  immigration 
which  a  pension  system  would  give  was  emphasized,  in  a  com- 
munication to  this  commission  by  the  treasurer  of  one  of 
the  leading  manufacturing  companies  of  the  State,  as  the 
main  reason  for  rejecting  any  such  scheme.  He  wrote  as 
follows :  — 

I  can  understand  how  countries  like  England,  Germany,  Italy  and 
perhaps  some  others  might  well  adopt  some  plan  such  as  you  suggest, 
for  the  sake  of  trying  to  keep  their  working  people  at  home;  but  I 
cannot  conceive  bow  any  one  can  want  to  encourage  the  class  of 
peoi)le  that  we  are  receiving  in  this  country  at  the  present  time 
coming  in  in  larger  numbers,  and,  in  fact.  I  think  we  should  do  some- 
thing to  discourage  it.  A  pension  plan  is  really  for  the  benefit  of  this 
class  of  people  and  the  encouragement  of  their  coming. 

8.  The  ]iolitical  effects  of  any  non-contributory  pension 
system  would  be  mischievous ;  it  would  open  the  door  to  po- 
litical favoritism  of  various  sorts.     There  would  be  constant 


'  "  Report  of  the  Royal  Commission  on  the  Poor  Laws  and  Relief  of  Distress,"  p.  167. 


238  OLD   AGE   PENSIONS.  [Jan. 

political  pressure  to  increase  the  amount  of  pensions,  to  lower 
the  age  limit,  to  make  the  administration  laxer.  This  politi- 
cal objection  is  set  forth  by  Mr.  John  Graham  Brooks  as 
follows :  — 

The  British  old  age  pension  act  of  1908  gives  the  local  i^oliticians 
a  chance  to  call  upon  the  vagaie  sympathy  of  the  community,  and 
whatever  doubts  there  may  be  about  a  man's  age  or  income,  they  give 
him  the  pension.  The  local  politician  says :  "  Give  it  to  him,  the  poor 
devil ;  never  mind  when  he  was  born,  —  he  is  a  friend  of  mine,"  That 
is  the  difheulty  they  are  going  to  have  in  England,  unless  they  get 
some  means  of  correcting  it. 

Again,  Mr.  Brooks  declares :  — 

I  should  say  that  the  condition  of  our  politics  is  the  first  difficulty  in 
the  way  of  the  working  of  a  pension  scheme.  I  need  not  waste  any 
breath  on  that.  You  know  precisely  what  this  is,  and  we  have  no  end 
of  illustrations  of  the  way  that  we  pension  off  all  sorts  of  persons  in 
the  army;  while  there  are  a  large  number  of  deserving,  there  are  many 
thousands  who  are  not,  —  and  pensions  are  given  on  account  of 
politics.  I  do  not  see  how  we  can  save  any  pension  system  in  this 
country  from  running  into  politics.^ 

9.  The  constitutionality  of  a  non-contributory  pension 
scheme  is  extremely  doubtful.  It  is  highly  questionable 
whether  the  constitutions  of  the  American  States,  or  the  Con- 
stitution of  the  United  States,  would  allow  the  expenditure  of 
money  raised  by  general  taxation  for  the  payment  of  pensions 
to  aged  persons.  There  would  seem  to  be  only  three  grounds 
upon  which  such  payment  might  be  clearly  justified  in  its 
constitutional  aspects,  namely,:  first,  as  a  reward  for  con- 
spicuous services  to  the  State ;  second,  as  a  measure  of  pauper 
relief;  third,  as  compensation  for  work  done.  It  is  difficult 
to  justify  a  proposal  of  non-contributory  pensions  on  any  one 
or  all  of  these  grounds.  Such  a  scheme,  therefore,  appears 
to  be  gravely  objectionable  from  a  constitutional  view-point, 
as  calling  for  an  expenditure  of  public  moneys  that  could  not 
easily  be  defended  on  any  recognized  principle.  The  non- 
contributory  pensions  now  paid  to  firemen,  policemen  and 
teachers  in  many  cities  find  some  measure  of  justification 

1  John  Graham  Brooks,  testimony  before  commission,  November  27,  1908. 


1910.]  HOUSE  — No.  1400.  239 

in  the  fact  that  persons  in  these  employments  are  not  only 
rendering  peculiarly  hazardous  or  meritorious  services  to  so- 
ciety, but  also  have  deprived  themselves  of  the  full  opportu- 
nity of  earning  the  largest  returns  for  their  services  in  a 
competitive  way,  and  consequently  may  have  some  claim 
upon  the  State  for  special  consideration  in  the  matter  of  pub- 
lic support  in  old  age.  This  claim,  hov^ever,  cannot  exist  in 
the  case  of  persons  employed  in  the  ordinary  competitive 
callings. 

(b)    The  Question  of  Voluntary  versus  Compulsory  Insurance. 

In  favor  of  compulsion,  it  is  argued  that  only  by  this 
means  can  the  application  of  the  scheme  be  made  general  and 
effective.  Compulsion  is  held  to  be  absolutely  essential  if 
the  pension  plan  is  to  reach  the  class  that  stands  most  in  need 
of  special  provision  for  old  age.  Any  voluntary  system,  it 
is  argued,  would  break  down  in  practice.  'No  one  has  put 
this  argument  more  forcibly  than  the  late  Prof.  A.  Shaeffle :  — 

Experience  has  everywhere  demonstrated  that  the  great  mass  of 
those  -workingmen  who  are  poorly  off  will  not  voluntarily  insure 
themselves.  Furthermore,  the  great  majority  of  those  who  would 
like  to  do  so  cannot,  on  account  of  the  smallness  of  their  earnings. 
In  other  words,  it  is  exactly  that  class  which  is  most  in  need  of 
insurance  that  either  will  not  or  cannot  avail  themselves  of  this 
device.  This  is  the  fundamental  weakness  of  voluntary  insurance. 
It  fails  to  reach  the  class  most  in  need  of  it.  Obligatory  insui'ance, 
and  obligatory  insurance  alone,  by  making  the  sup^Dort  of  insurance 
an  indispensable  item  of  the  family  budget,  will  act  upon  wages  in 
such  a  way  as  to  raise  its  standard,  which  increased  expenditure  will 
be  shifted  upon  the  cost  of  production  and  jirices,  and  thus  make  a 
general  industrial  condition,  to  be  borne  without  any  appreciable 
hardship.^ 

Attention  is  also  called  to  the- fact  that  the  German  plan 
of  workingmen's  insurance,  which  has  been  pronounced  by 
various  investigators  and  observers  to  be  the  most  successful 
scheme  of  old  age  provision  now  in  operation,  is  compulsory. 

In  opposition  to  the  compulsory  principle,  various  argu- 
ments are  urged :  — 


1  Quoted  by  W.  F.  AVilloughby,  "Workingmen's  Insurance,"  pp.  338,  339. 


240  OLD   AGE   PENSIONS.  [Jan. 

1.  Any  enforced  scheme  of  State  insnrance  is  paternaliz- 
ing  and  enervating  in  its  influence  on  the  character  of  the 
people.  Compulsion  is  declared  to  be  incompatible  with  the 
maintenance  of  a  vigorous  spirit  of  independence  and  self- 
reliance  throughout  the  population.  Individual  responsibil- 
ity in  the  matter  of  ]3rovision  for  old  age  is  held  to  exert  a 
healthy  tonic  and  educative  effect  on  the  individual.  Presi- 
dent A.  T.  Hadley  of  Yale  University  has  said,  in  criticism 
of  compulsory  insurance  for  workingmen :  — 

We  need  measures  which  shall  increase  individual  responsibility, 
rather  than  diminish  it;  measures  which  shall  give  us  more  self- 
reliance,  and  less  reliance  on  society  as  a  whole.  We  cannot  afford 
to  countenance  a  system  of  morals  or  law  which  justifies  the  individ- 
ual in  looking  to  the  community  rather  than  to  himself  for  support 
in  age  or  infirmity.^ 

2.  In  particular,  it  is  contended  that  the  compulsory  prin- 
ciple is  contrary  to  the  American  spirit  of  self-supporting 
and  self-respecting  independence.  Any  scheme  based  upon 
this  principle  would  be  intolerable  to  American  citizens. 
Similarly,  the  natural  distaste  of  Englishmen  for  compulsion 
of  any  sort  led  to  the  rejection  of  all  plans  of  compulsory  in- 
surance proposed  in  that  country.  There  seems  to  have  been 
a  general  feeling  that  "  no  government  would  stand  that  at- 
tempted to  carry  such  a  measure." - 

3.  A  practical  difficulty  also  is  emphasized.  The  applica- 
tion of  the  compulsory  principle  in  the  case  of  persons  who 
are  irregularly  employed,  as  well  as  in  the  case  of  those  who 
are  their  own  employers,  would  be  extremely  difficult.  Said 
Mr.  Joseph  Chamberlain :  • — 

I  have  never  seen  how  you  could  apply  compulsion  to  any  but 
persons  who  are  in  regular  employment.  It  is  very  easy  in  their 
case  to  deduct  their  contributions  from  their  wages  through  the 
employers;  but  in  the  case  of  persons  who  are  their  own  emi^loyers, 
or  who  are  in  casual  employment,  —  a  very  large  part  of  the  popula- 
tion, —  I  have  never  seen  that  it  would  be  possible  to  apply  this 
compulsory  provision.' 

'  A.  T.  Hadley,  "Economios,"  p.  63. 

•  Statement  of  R.  P.  Hardy,  actuary,  before  Committee  on  Old  Age  Pensions,  1898. 
Report,  p.  156. 

3  Quoted  by  W.  Sutherland,  "Old  Age  Pensions,"  p.  10. 


1910.]  HOUSE  — No.  1400.  241 

4.  As  in  the  case  of  the  non-contributory  principle,  a 
constitutional  objection  is  also  raised.  The  proposal  of  com- 
]nilsory  insurance  involves  the  constitutionality  of  a  law  oblig- 
iug'  Avage  earners  to  set  aside  a  certain  percentage  of  their 
earnings  to  provide  annuities  for  themselves  in  old  age.  This 
scheme  is  of  doubtful  constitutionality.  If  it  could  bp 
shown  that  the  purpose  of  the  compulsion,  or  the  effect,  would 
be  to  diminish  pauperism  and  protect  the  State  against  the 
burden  of  old  age  dependency,  then  such  exercise  of  compul- 
sion might  conceivably  be  justified  as  a  preventive  measure 
of  poor  relief.  This  consideration  seems  to  be  the  only  one 
that  could  be  consistently  urged  in  constitutional  defence  of 
compulsory  insurance.  There  is,  at  least,  a  reasonable  doubt 
whether  this  consideration  would  be  held  by  the  courts  to 
justify  a  compulsory  insurance  statute. 

(c)     The  Question  of  Universal  versus  Partial  Schemes. 

The  main  arg-uments  for  a  universal  pension  scheme  are 
these :  — 

1.  It  would  remove  entirely  the  odium  or  the  stigina  now 
attaching  to  pauperism.  If  pensions  were  offered  to  all  aged 
persons  without  discrimination,  the  acceptance  of  a  pension 
would  not  be  regarded  as  a  badge  of  dependency  or  delin- 
quency ;  the  pensioners  would  be  entirely  respectable.  Mr. 
Charles  Booth  remarks  that  the  essential  characteristic  of 
pauper  relief  as  now  administered  is  that  the  benefit  is 
granted  to  the  destitute  because  of  their  destitution. 


It  is  this  selection,  with  its  form  of  ai)plicati()n  and  tlie  inquiries 
it  involves,  that  brines  loss  of  independence  and  of  dignity  and  a 
feeling  of  disgrace.  Herein  lies  the  stigma  of  pauperism.  Benefits 
which  all  may  enjoy  carry  with  them  no  slur.  Educational  endow- 
ments as  enjoyed  by  the  rich,  free  elementary  education  as  bestowed 
upon  the  poorer  classes,  the  facilities  offered  by  free  libraries,  etc., 
are  cases  in  ])()int.  Pensions  open  to  all  and  paid  for  out  of  taxa- 
tion would  have  nothing,  either  morally  or  economically,  in  common 
with  pauperism.^ 

*  Charles  Booth,  "The  Aged  Poor;  a  Proposal,"  p.  56. 


242  OLD   AGE    PENSIONS.  [Jan. 

Similarly,  in  another  connection,  Mr.  Booth  declares :  — 

To  select  the  2-ioor  is  to  ijauperize;  to  select  the  deserving  is  to 
patronize;  to  do  either  is  to  humiliate.' 

2.  The  administration  would  be  easy.  It  would  not  be 
necessary  to  lay  down  complicated  conditions  of  eligibility. 
The  plan  would  involve  no  inquisitorial  examination  into  the 
circumstances  of  the  beneficiaries."  This  alleged  advantage 
of  a  universal  scheme  is  stated  by  W.  Sutherland  in  these 
words :  — 

One  of  the  lesser  merits  of  a  universal  scheme  is  that  its  cost  of 
administration  would  be  small.  It  is  the  least  inquisitorial  of 
schemes;  and  the  less  inquisitorial  a  pension  scheme,  the  cheaper 
its  administration.  There  are  people  who  are  not  opposed  to  an  eco- 
nomical pension  system,  but  who  shrink  from  giving  support  to  any 
scheme  which  involves  a  large  expenditure  on  administration.  Some 
of  them  go  so  far  as  to  suggest  that  they  object  more  to  every  penny 
that  is  spent  on  administration  than  to  every  pound  that  is  dis- 
tributed in  pensions.' 


3.  The  whole  scheme  is  simple  and  intelligible.     There  are 
)  intricate  and  troubles 
Mr.  Sutherland  observes 


no  intricate  and  troublesome  details  to  master.     Here  again 


A  universal  scheme  is  easily  understood ;  it  is  logical,  and  it  treats 
all  the  aged  population  alike.  Of  the  many  reasons  for  which  it  is 
admirable,  none,  jierhaps,  is  more  speedily  appreciated  by  the  men 
who  read,  or  write,  or  speak,  than  the  ease  with  which  it  can  be 
expounded  and  defended.  Like  the  doctrine  of  original  sin,  it  is 
sympathetically  received  by  almost  any  audience,  and  is  even  more 
sympathetically  exj^ounded  by  the  average  sjoeaker.^ 

Against  the  universal  principle  numerous  objections  are 
brought : — 

The  expense  would  be  tremendous.  This  objection  was 
vigorously  urged  against  schemes  of  non-contributory  uni- 
versal pensions  proposed  in  England  :  — 

'  Charles  Booth,  "Pauperism  and  the  Endowment  of  Old  Age,"  p.  237. 

2  W.  Sutherland,  "Old  Age  Pensions,"  p.  49. 

3  76!^.,  pp.  41,  42. 


1910.]  HOUSE  — No.  1400.  243 

The  cost  would  be  an  insuperable  difficulty,  for  to  grant  os.  a  week 
at  age  65,  in  respect  of  the  population  in  England  and  Wales  only, 
would  involve  about  £20,000,000  per  annum  for  the  present  recip- 
ients, and  by  1941  the  figures  would  have  risen  to  £36,000,000/ 

Mr.  Charles  Booth  himself  estimated  the  cost  of  his  scheme 
of  providing  a  pension  of  7s.  a  week  for  every  person  over  70 
years  of  age  in  the  United  Kingdom  at  £16,000,000  for  the 
year  1900.-  The  cost  of  a  universal  pension  system  in  Mas- 
sachusetts, providing  a  pension  of  $100  per  year  for  every 
person  70  years  of  age  or  over,  would  be  $10,500,000. 

2.  The  grant  of  pensions  to  the  well-to-do  and  wealthy 
would  involve  needless  and  wasteful  expenditure  of  public 
moneys.  It  is  regarded  as  absurd  to  give  a  pension  to  the 
man  who  has  an  adequate  income.    Mr.  Sutherland  writes :  — 

The  universal  scheme  is  the  most  costly  of  all  the  pension  schemes, 
and  should  therefore  be  one  of  the  last  to  be  considered  feasible.  It 
confers  pensions  on  people  who  do  not  need  them,  which  is  bad  in 
policy  and  wasteful  in  practice.  Universal  pensions  are  really  doles 
or  largess  distributed  by  the  State  on  no  principle  of  justice,  but 
indiscriminately,  without  any  check  on  the  persons  benefited  or  on 
the  sums  which  they  will  ultimately  receive  as  pensions.  To  become 
qualified  foi-  a  pension,  a  person  has  to  do  nothing  but  to  grow  old.^ 

3.  The  inclusion  of  criminals  and  paupers  within  the  pen- 
sionable population  is  indefensible  on  any  ground  of  indi- 
vidual desert  or  public  policy.  Such  persons  clearly  have 
no  claim  to  a  pension,  whatever  may  be  true  of  the  deserving 
and  respectable  aged  poor.  Moreover,  the  policy  of  pension- 
ing the  industrious  and  the  thriftless,  the  sober  and  the 
intemperate,  the  deserving  and  the  undeserving,  indiscrim- 
inately, would  be  in  the  highest  degree  pauperizing  and  de- 
moralizing. It  would  put  a  premium  upon  thriftlessness  and 
dependency.    ^Ir.  Lecky  has  well  said,  in  this  connection  :  — 

The  universal  endowment  of  all  aged  persons  .  .  .  would  im])ose 
upon  the  nation  a  perpetual  tax  ...  an  obligation  from  which,  if 

'  "Old  Age  Pensions:  a  Collection  of  Short  Papers,"  p.  9. 
«  Charles  Booth.  "The  Aged  Poor,"  p.  54. 
'  W.  Sutherland,  "Old  Age  Pensions,"  p.  50. 


244  OLD   AGE   PENSIONS.  [Jan. 

once  undertaken,  it  would  be  impossible  to  recede  without  producing 
a  terrible  catastrophe,  .  .  .  and  it  Avould  do  so  in  order  to  attain  an 
end  which  would  probably  be  much  more  mischievous  than  the 
reverse.  I  can  hardly  conceive  anything  more  certain  to  discourage 
thrift  and  to  sap  the  robust er  qualities  of  the  English  people  than 
that  the  belief  should  grow  up  among  the  whole  working  population, 
including  the  most  industrious,  the  most  respectable  and  the  most 
independent,  that  they  should  look  forward  to  the  State,  and  not  to 
their  own  exertions,  to  support  them  during  their  old  age.' 

8.     The  Wages  Question  and  the  Pension  Problem. 
The  question  of  wages  and  the  cost  of  living  arises  in  any 
consideration  of  proposals  of  old  age  pensions  or  insurance. 
In  the  issue  between  contributory  and  non-contributory  sys- 
tems this  question  has  been  warmly  debated.     Advocates  of 
non-contributory  pensions  hold  that  wage  earners,  as  a  class, 
do  not  receive  enough  pay  to  enable  them  to  save  for  old  age 
or  to  contribute  to  pension  or  insurance  funds.     They  argue 
that  it  would  be  useless  to.  institute  any  voluntary  contribu- 
tory system,  since  the  workers  could  not  take  advantage  of  its 
permissive  provisions ;  nor,  on  the  other  hand,  would  a  com- 
pulsory contributory  system  be  practicable,  for  the  reason  that 
the  enforced  payment  of  contributions  would  trench  upon  the 
necessary  expenditures  for  living,  and  would  thus  inflict  hard- 
ship on  the  wage  earners.     The  contention  is  that,  in  the 
absence  of  a  living  wage,  a  contributory  pension  or  insurance 
system  is  impossible ;  if  there  is  to  be  any  system  of  old  age 
provision  at  all,  it  must  be  non-contributory.     On  the  other 
hand,   the  claim  is  made  by  the  advocates  of  contributory 
pension  or  insurance  schemes  that  wage  earners,  as  a  class, 
do  receive  a  living  wage.     It  is  contended,  accordingly,  that 
the  beneficiaries  of  the  pension  or  insurance  funds  are  able 
to  support  the  system  by  their  o^vn  contributions,  and  ought, 
in  justice  to  other  tax  payers,  to  assume  this  reasonable  as- 
sessment upon  their  wages.     It  is  further  contended  by  those 
who  take  this  view  that  the  establishment  of  non-contributory 
pensions  would  have  the   effect   of  depressing  the   rate   of 
wages  to  a  point  below  the  level  of  an  adequate  living  Avage, 

1  W.  E.  H.  Lecky,  "Old  Age  Pensions,"  p.  103. 


1910.]  HOUSE  — No.  1400.  245 

and  would  thus  injure,  rather  than  benefit,  the  members  of 
the  working  class.     Thus  arise  two  questions:  First,  what 
.is  a  living  wage?     Second,  do  workers  as  a  class  receive  a 
living:  wage  ? 

The  living  wage  may  be  broadly  defined  as  a  wage  adequate 
to  provide  maintenance  for  a  family  of  five  persons  in  reason- 
able comfort,  according  to  the  prevailing  standard  of  living, 
and  to  enable  the  wage  earner  to  provide  by  saving  for  the 
emergencies  of  life,  including  sickness,  accident,  invalidity 
and  old  age. 

The  question  as  to  what  rate  of  pay  constitutes  such  a  liv- 
ing wage,  expressed  in  dollars  and  cents,  cannot  be  answered 
definitely  for  the  wage  earners  of  a  whole  State.  There  are 
too  many  variable  factors  which  enter  into  the  problem  of 
fixing  a  mathematical  estimate  of  a  living  wage:  first,  the 
standards  of  living  and  spending  vary  considerably  for  dif- 
ferent groups  of  the  population  and  different  sections  of  the 
State;  second,  rents  and  prices  are  by  no  means  uniform 
throughout  the  State;  third,  prices  also  fluctuate  from  year 
to  year,  so  that  an  amount  sufficient  for  comfortable  living 
at  one  time  would  be  quite  inadequate  at  another ;  fourth,  the 
ability  to  economize  and  manage  household  expenses  skilfully 
differs  widely  with  different  families. 

While  it  is  thus  impossible  to  set  down  any  precise  amount 
as  constituting  a  living  wage  for  the  working  class  of  a  whole 
State,  it  is  possible  to  fix  a  minimum  amount  below  which 
it  may  be  affirmed  with  reasonable  certainty  that  an  Ameri- 
can family  cannot  maintain  itself  in  decent  circumstances. 
There  is  a  tolerable  agreement  among  investigators  and  ob- 
servers that  such  a  minimum  wage  for  an  average  family  of 
five  persons  may  be  set  at  about  $600  a  year,  or  $12  a  week. 
Prof.  J.  A.  Ryan,  in  his  study  of  "  A  Living  Wage,"  lays 
down  the  following  conclusions  on  this  question :  — 

First,  anything  less  than  $600  per  year  is  not  a  living  wage  in  any 
of  the  cities  of  the  United  States:  second,  this  sum  is  probably  a 
living  wage  in  those  cities  of  the  southern  States  in  which  fuel, 
clothing,  food  and  some  other  items  of  exjienditure  are  cheaper  than 
in  the  north;  third,  it  is  j^ossibly  a  living  wage  in  the  moderately 


246  OLD   AGE   PENSIONS.  [Jan. 

sized  cities  of  the  west,  north  and  east;  and,  fourth,  in  some  of  the 
largest  cities  of  the  last-named  regions  it  is  certainly  not  a  living 
wage.^ 

This  estimate  of  a  scientific  investigator  is  confirmed  by 
the  opinion  of  a  practical  observer  and  competent  representa- 
tive of  organized  labor,  Mr.  John  Mitchell,  who  regards  $600 
a  year  as  the  minimum  living  v^age  according  to  the  Ameri- 
can standard.     He  writes :  — 

It  is,  of  course,  true  that  this  estimate  applies  more  exactly  to 
workmen  in  towns  of  from  5,000  to  100,000  inhabitants  than  it  does 
to  other  places.  In  speaking  of  $600  for  unskilled  workmen,  I  do  not 
mean  to  include  farm  hands  or  men  of  rural  communities,  where  the 
cost  of  living  is  less  and  the  standard  of  living  is  not  so  high.  On 
the  other  hand,  in  cities  of  over  100,000,  and  especially  in  cities  of 
over  500,000,  $600  would,  in  my  opinion,  be  insufficient  to  maintain 
this  standard  for  unskilled  workingmen.  This  is  more  especially 
true  of  the  city  of  New  York,  where  the  cost  of  maintaining  a  fair 
standard  of  living  would  be  much  greater,  owing  to  excessive  rents, 
and  where  the  ideal  of  a  separate  small  house  for  the  workman  must 
itself  be  given  up.  For  the  great  mass  of  unskilled  workmen,  how- 
ever, residing  in  towns  and  cities  with  a  population  of  from  5,000 
to  100,000,  the  fair  wage,  a  wage  consistent  with  American  standards 
of  living  should  not  be  less  than  $600  a  year." 

Again,  the  United  States  Bnreau  of  Statistics  of  Labor 
presented,  in  its  seventh  annnal  report,  itemized  statements 
of  the  average  cost  of  living  for  one  year  of  2,132  families, 
in  the  cotton  industry  of  the  United  States,  the  average  size 
of  these  families  being  5.7.  The  total  average  family  expend- 
iture was  $610.61.  Some  of  the  families  did  not,  however, 
spend  anything  for  certain  purposes  regarded  as  necessary 
to  a  normal  living  standard.  The  report  estimates  on  the 
basis  of  the  returns  that  the  normal  average  for  all  purposes 
should  be  $687.02.=^ 

Eurther,  the  report  of  a  special  committee  on  the  standard 
of  living,  of  the  New  York  Conference  of  Charities  and  Cor- 

'  J.  A.  Ryan,  "  A  Living  Wage,"  p.  150. 

2  John  Mitchell,  "Organized  Labor,"  pp.  117,  118;  compare  also  E.  T.  Devine, 
"Principles  of  Relief,"  p.  35;  Robert  Hunter,  "Poverty,"  pp.  51,  et  seq.;  F.  W.  Lewis, 
"State  Insurance,"  pp.  10,  11. 

3  Seventh  annual  report.  United  States  Commissioner  of  Labor,  1S91,  pp.  1678-1682. 


1910.]  HOUSE  — No.  1400.  247 

rection,  1907,  made  a  somewhat  higher  estimate  for  Xew 
York  City.  The  main  conclusion  of  this  committee  was 
that  '*  $825  is  sufficient  for  the  average  family  of  five  indi- 
viduals, comprising  the  father,  mother  and  three  children 
under  14  years  of  age,  to  maintain  a  fairly  proper  standard 
of  living  in  the  borough  of  Manhattan.''^  Concerning  lower 
incomes,  the  committee  concludes  that  an  income  of  between 
$700  and  $800  will  enable  a  family  barely  to  support  itself, 
provided  that  it  is  subject  to  no  extraordinary  expenditures 
by  reason  of  sickness,  death  or  untoward  circumstances ;  that 
is,  such  an  income  would  not  provide  at  all  for  saving.  An 
income  of  $600  to  $700  is  declared  to  be  wholly  inadequate 
to  maintain  the  proper  standard  of  living,  and  no  self-respect- 
ing family  should  be  asked  or  expected  to  live  on  such  an 
income. 

The  latest  estimate  of  a  normal  living  standard  is  that 
given  by  Prof.  R.  C.  Chapin,  in  his  study  of  the  standard  of 
living  in  Xew  York  City,  prepared  for  the  Russell  Sage 
Foundation.  The  study  covered  exhaustively  391  typical 
working-class  families  in  Xew  York  City.  The  chief  con- 
clusion is  that  an  "  income  of  $900  or  over  probably  permits 
the  maintenance  of  a  normal  standard,  at  least  so  far  as 
physical  man  is  concerned."-  As  for  the  lower  incomes,  the 
conclusion  of  this  investigator  is  that,  while  some  saving  in 
families  with  incomes  of  $600  and  $700  does  take  place,  it  is 
relatively  infrequent  till  the  $800  line  is  reached.^ 

The  estimates  of  the  committee  of  the  Xew  York  Confer- 
ence of  Charities  and  Correction  and  of  the  Russell  Sage  in- 
vestigator are  based  upon  standards  of  living  and  spending  in 
Xew  York  Citv,  and  are  thus  obviouslv  too  hich  for  the 
country  at  large.  The  estimate  of  $900  would  undoubtedly 
have  to  be  reduced  considerably,  even  in  the  case  of  Boston, 
as  rents  and  prices  are,  as  is  well  known,  somewhat  lower  in 
the  latter  city  than  in  Xew  York.  For  the  other  cities  in 
^Massachusetts  and  for  the  country  districts  the  Xew  York 
estimate  would  have  to  be  reduced   considerably.      On   the 

>  The  report  of  this  committee  is  printed  in  R.  C.  Chapin,  "The  Standard  of  Living 
in  New  York  City."  published  by  the  Russell  Sage  Foumlation,  Appendix  2. 

2  R.  C.  Chapin,  "Standard  of  Living,"  etc.,  p.  246. 

3  Ibid.,  p.  233. 


248  OLD   AGE   PENSIONS.  [Jan. 

whole,  it  seems  reasonable  to  take  the  figure  of  $600  a  year 
as  representing  the  lowest  amount  that  can  be  regarded  as  a 
living  wage  for  a  working  class  family.  Clearly,  wages  be- 
low this  line  cannot  be  sufficient  to  provide  properly  for  the 
current  living  expenses  and  for  the  necessary  family  saving. 
The  fact  may  be  noted  in  this  connection  that  the  average  of 
the  total  weekly  expenditures  of  184  non-dependent  families 
enumerated  in  the  statistical  investigation  conducted  by  this 
commission  was  $12. 

While  it  is  thus  extremely  difficult  to  answer  the  prelim- 
inary question  as  to  what  constitutes  a  living  wage,  it  is  prac- 
tically impossible  to  answer  the  further  question  as  to  whether 
the  wage  earners  as  a  class  now  receive  a  living  wage.  The 
data  required  to  determine  this  point  conclusively  are  not 
available.  Such  wage  statistics  as  are  to  be  had  for  the 
United  States  and  for  this  Commonwealth  do  not  afford  a 
basis  for  a  decisive  pronouncement  on  the  question  under  con- 
sideration ;  they  merely  serve  to  indicate  broadly  the  general 
level  of  wages. 

For  Massachusetts,  statistics  of  wages  are  given  in  the  an- 
nual reports  on  the  "Statistics  of  Manufactures,"  issued  by 
the  State  Bureau  of  Statistics.  The  report  for  1908  shows 
that  the  average  yearly  earnings  for  575,997  wage  earners 
reported  as  employed  in  manufacturing  industries  through- 
out the  State  were  $510.71.  The  report  groups  wage  earners 
in  three  classes,  according  to  the  amount  of  the  weekly  wages, 
namely :  first,  the  high-wage  class,  consisting  of  wage  earners 
paid  $12  a  week  and  over;  second,  the  medium-wage  class, 
those  paid  from  $8  to  $12 ;  third,  the  low-wage  class,  those 
receiving  less  than  $8.  Taking  the  whole  body  of  wage  earn- 
ers, we  find  that,  of  the  575,997  workers  for  whom  returns 
were  received,  182,496,  or  31.68  per  cent.,  were  in  the  high- 
wage  class;  206,723,  or  35.89  per  cent,  in  the  medium-wage 
class;  and  186,778,  or  32.43  per  cent.,  in  the  low-wage  class. 

The  general  averages  of  weekly  wages  or  of  yearly  earn- 
ings, based  on  returns  for  all  workers,  —  male  and  female, 
adult  and  minor,  —  do  not,  however,  afford  a  fair  basis  for 
determining  the  proportion  of  wage  earners  actually  in  re- 
•'eipt  of  a  living  wage.     If  $600  be  taken  as  representing  the 


1910.]  HOUSE  — No.  1400.  249 

minimum  living  wage  for  a  workingman  with  a  family  of 
five,  then  clearly  the  living  wage  for  minors,  for  women,  for 
unmarried  adults  and  for  married  adults  with  small  families, 
is  somewhat  lower  than  this  amount.  Consequently,  general 
averages  that  include  not  only  the  wages  of  married  adults, 
but  also  of  unmarried  adults,  of  women  and  of  minors,  do 
not  afford  a  satisfactory  basis  for  drawing  conclusions  re- 
garding the  proportion  of  the  workers  receiving  a  living 
wage.  It  is  evident  that  we  can  reach  a  nearer  approxima- 
tion to  the  true  condition  if,  instead  of  taking  all  workers  in 
a  mass,  we  select  merely  the  adult  males  as  a  basis  for  esti- 
mating the  proportion  of  adequately  paid  workers. 

The  figures  of  weekly  wages  of  adult  males  in  the  report 
on  the  "  Statistics  of  Manufactures  "  for  1908  show  that  out 
of  a  total  of  371,156  adult  males  for  whom  returns  were 
made,  48.35  per  cent,  were  in  the  high-wage  class,  38.39  per 
cent,  were  in  the  medium-wage  class;  only  13.26  per  cent, 
were  in  the  low-wage  class.  This  showing  is  naturally  more 
favorable  than  that  for  the  whole  body  of  workers.  From 
the  wage  returns  given  in  the  report  for  1907  it  is  possible 
to  determine  the  percentages  of  adult  male  workers  in  re- 
ceipt, respectively,  of  $12  and  more  weekly  wages,  and  $10 
and  more  weekly  wages,  in  leading  industries  of  the  State. 
The  following  table  shows  such  percentages  for  twelve  indus- 
tries, selected  as  employing  the  largest  numbers  of  workers. 
Out  of  a  total  of  604,390  persons  employed  in  the  industries 
covered  by  the  report,  420,148  were  employed  in  the  solocted 
twelve  industries. 


250 


OLD   AGE   PENSIONS. 


[Jan. 


Classified  Weekly  Wages  for  Adult  Male  Workers  in  Twelve 

Leading  Industries. 


Industries. 

No.  Adult 
Males  em- 
ployed. 

Per  Cent. 

receiving  $12 

or  More. 

Per  Cent. 

receiving  $10 

or  More. 

1.  Boots  and  shoes,          .... 

56,365 

62.78 

75.72 

2.  Carpetings.          ..... 

2,965 

39.19 

53.53 

3.  Cotton  goods,      ..... 

48,047 

28.31 

46.93 

4.  Electric  apparatus  and  appliances, 

10,310 

66.56 

80.05 

5.  Food  preparations,      .... 

9,268 

52.12 

74.03 

6.  Leather,     ...... 

11,493 

31.44 

59.63 

7.  Machines  and  machinery.     . 

42,962 

51.81 

68.41 

8.  Metals  and  metallic  goods,  . 

28,104 

53.49 

71.49 

9.  Paper 

8,845 

35.92 

60.93 

10.  Rubber  and  elastics,   .... 

8,965 

38.22 

62.48 

11.  Woolen  goods,    ..... 

16,326 

26.54 

44.38 

12.  Worsted  goods,             .... 

13,429 

33.62 

51.12 

The  foregoing  figures  throw  some  light  on  the  question  as 
to  what  proportion  of  the  wage  earners  of  the  State  are  in 
receipt  of  a  living  wage.  It  should  be  borne  in  mind,  how- 
ever, that  definite  conclusions  on  this  question,  as  has  been 
pointed  out,  are  extremely  hazardous.  The  figures  that  have 
been  cited  are  given  merely  as  indicating  the  conditions  with 
respect  to  wage  rates  in  this  State,  not  as  settling  conclusively 
the  question  as  to  whether  wage  earners  as  a  class  now  receive 
a  living  wage. 

Another  question  that  calls  for  consideration  in  this  con- 
nection is  the  probable  effect  of  any  pension  or  insurance  sys- 
tem upon  the  rate  of  wages.  The  assertion  has  been  made 
that  the  payments  to  pension  or  insurance  funds  must  all 
come  out  of  wages  in  the  long  run,  even  if  in  the  first  in- 
stance they  are  contributed  partly  or  wholly  by  the  em- 
ployers or  by  the  State.  The  theory  is  that  competition  in 
the  labor  market  will,  in  the  end,  reduce  wages  by  an  amount 
equivalent  to  the  pension  or  insurance  subsidy  from  employ- 
ers or  State.     The  case  of  (1)   contributions  to  pension  or 


1910.]  HOUSE  — No.  1400.  251 

insurance  funds  by  employers  and  that  of  (2)  contributions 
by  the  State  are  somewhat  different,  and  should  be  considered 
separately. 

The  view  that  the  burden  of  employers'  contributions  will 
be  shifted  on  the  workingman  by  reduction  of  wages  is  thus 
stated  by  President  A.  T.  Hadley  of  Yale :  — 

The  payments  to  the  insurance  funds  must  chiefly,  if  not  wholly, 
come  out  of  wages.  Even  though  they  be  nominally  levied  on  the 
employer,  he  is  compelled  by  competition  with  other  employers  not 
subject  to  this  levy  to  reduce  in  corresponding  degree  the  wages  he 
pays.  If  the  workman  receives  less  wages,  he  must  either  consume 
less  or  save  less.  So  far  as  he  economizes  on  useless  articles  of  con- 
sumption, the  insurance  fund  thus  created  represents  a  positive  gain 
to  the  community,  providing  for  the  workman's  support  in  the  future 
without  causing  any  corresponding  general  loss  or  drain  in  the 
present.  But  if  he  economizes  on  articles  that  are  necessary  or  useful 
to  his  well-being  or  that  of  his  family,  he  lessens  his  own  labor 
power  and  that  of  his  children,  and  diminishes  rather  than  increases 
the  general  ability  of  the  community  for  maintaining  the  necessary 
burdens  of  poor  relief.  If,  finally,  he  makes  these  payments  out  of 
money  that  he  otherwise  would  have  saved,  he  transfers  the  provision 
for  his  support  from  his  own  shoulders  to  that  of  a  public  organiza- 
tion.    He  becomes  less  self-supporting.' 

This  argument  that  payments  to  pension  or  insurance  funds 
by  employers,  however  levied  in  the  first  instance,  must  come 
out  of  wages,  since  employers  subject  to  the  insurance  levy 
will  be  forced  by  competition  with  other  employers  not  thus 
burdened  to  reduce  the  wages  paid  to  their  workers,  is  based 
on  the  assumption  that  the  employers  who  have  to  pay  pension 
or  insurance  contributions  are  in  all  cases  actually  subject 
to  such  competition.  This  would  probably  hold  true  of  any 
American  State  adopting  an  insurance  system  like  the  Ger- 
man. The  tendency  would  be  to  reduction  of  wages,  as  ar- 
ffued  by  President  Hadlev.  In  Germanv,  however,  the  rate 
of  waffes  has  actuallv  risen  instead  of  fallen  since  the  intro- 
duction  of  compulsory  old  age  insurance.  There  the  cost  has 
certainly  not  come  out  of  wages  in  any  large  part.  The  bur- 
den of  supporting  the  insurance  system  has  been  divided  be- 

'  A.  T.  Hadley,  "Economics,"  pp.  60,  61. 


252  OLD   AGE   PENSIONS.  [Jan. 

tween  the  State,  the  employer  and  the  employed,  —  in  what 
proportion  it  is  impossible  to  state  exactly. 

In  determining  the  likelihood  of  reduction  of  wages  under 
the  operation  of  a  pension  or  insurance  system,  supported 
wholly  or  partly  by  contributions  from  employers,  account 
must  be  taken  of  the  social  conditions  of  the  wage  earners, 
particularly  the  education  and  the  organization  of  the  work- 
ing class,  and  of  the  state  of  public  opinion  as  affecting  the 
ability  of  the  class  to  resist  pressure  on  the  wage  rate.  It 
must  further  be  considered  whether  any  increase  of  efficiency 
on  the  part  of  labor  may  be  expected  to  result  from  the  pen- 
sion or  insurance  system,  as  an  offset  of  any  tendency  toward 
reduction  of  wages.  In  general,  however,  it  must  be  rec- 
ogTiized  that  the  effect  on  wages  of  any  pension  or  insurance 
system  supported  wholly  or  partly  by  assessments  on  employ- 
ers would  probably  be  unfavorable,  especially  if  the  system 
were  established  in  one  American  State,  since  most  branches 
of  industry  are  subject  to  interstate  competition. 

The  grant  of  pension  or  insurance  subsidies  by  the  State 
would  tend  to  bring  about  a  reduction  of  wages  in  various 
ways :  — 

First.  —  The  effect  of  a  subsidized  pension  or  insurance 
system  in  any  State  would  be  to  attract  wage  earners  from 
outside,  and  thus  to  crowd  the  labor  market,  at  least  for  a 
time.  Even  if  a  period  of  residence  were  required  as  a  con- 
dition for  participation  in  the  pension  or  insurance  system, 
its  existence  would  nevertheless  operate  to  some  extent  as  an 
inducement  to  workers  to  take  up  their  residence  in  the  State. 
This  result  could  hardly  fail  to  react  unfavorably  upon  the 
wage  rate. 

Second.  —  There  is  the  direct  competition  of  the  pensioned 
aged  workers.  Clearly,  if  a  part  of  the  workers  in  any  em- 
ployment are  pensioned  by  the  State,  they  can,  if  they  choose, 
underbid  their  competitors  who  are  not  in  receipt  of  such  aid. 
The  force  of  this  argument  depends  largely  upon  the  age  at 
which  pensions  are  granted,  and  the  amount  of  the  pension 
given.  The  argument  would  have  much  force  in  the  ease  of 
a  pension  system  that  provided  liberal  pensions  at  an  early 
age.     Obviously,  a  pension  of  $500  a  year  to  all  workers  over 


1910.]  HOUSE  — No.  1400.  253 

50  years  of  age  would  affect  the  rate  of  wages  most  unfavora- 
bly in  the  manner  described.  If  the  pensionable  age,  how- 
ever, were  fixed  at  70,  the  liability  of  depression  of  the  wage 
rate  through  the  competition  of  the  pensioned  workers  would 
not  be  considerable,  especially  if  the  amount  of  the  pension 
were  small,  as  in  the  existing  pension  schemes  of  European 
countries.  This  direct  competition  of  the  pensioned  workers 
is  practically  a  negligible  factor,  so  far  as  the  existing  systems 
of  old  age  insurance  and  pensions  are  concerned. 

Third.  —  There  is  the  reflex  competition  created  by  the 
pension  system,  as  it  may  be  termed.  This  is  the  influence 
of  the  prospect  of  a  State  subsidy  in  old  age  in  relation  to  the 
wage  requirements  of  adult  workers  in  general.  If  the  State 
guaranteed  gratuitous  pensions  for  old  age,  this  fact  would 
doubtless  be  taken  into  account  generally  by  adult  workers, 
and  the  rate  of  wages  which  they  would  demand  or  require 
would  be  reduced  correspondingly.  That  is  to  say,  the  pros- 
pect of  a  State  subsidy  would  reduce  the  need  of  individual 
saving;  wage  earners,  not  being  under  the  necessity  of  mak- 
ing full  provision  for  old  age,  could  afford  to  work  for  less 
wages.  In  short,  the  amount  of  the  pension  would  be  dis- 
counted in  advance  by  the  workers  in  their  competition  for 
employment. 

Fourth.  —  There  is,  finally,  the  effect  of  the  tax  burden 
imposed  by  the  pension  system,  in  its  distribution  throughout 
the  population.  The  taxes  to  defray  the  expenses  of  a  non- 
contributory  pension  system,  or  of  a  subsidized  pension  or  in- 
surance scheme,  would,  in  the  first  instance,  fall  largely  upon 
the  industries  of  any  State  adopting  such  a  plan.  It  is  clear 
that  manufacturers  would  make  an  effort  to  shift  this  burden, 
so  far  as  possible,  upon  consumers  or  upon  employees,  in 
the  form  of  higher  prices  or  lower  wages,  respectively.  The 
former  course  would  be  practically  impossible  in  the  case 
of  industries  subject  to  interstate  competition.  The  tendency 
then  would  be  to  reduce  wages.  Here,  again,  the  social  con- 
dition of  the  working  cla?s  and  the  state  of  public  opinion 
must  be  taken  into  account  in  determining  the  extent  to  which 
this  result  actually  would  be  likely  to  follow. 

The  liability  of  a  depression  of  wages  through   indirect 


254  OLD   AGE   PENSIONS.  [Jan. 

comiDetition,  as  it  has  been  termed,  appears  to  be  the  chief 
consideration  here.  Of  course,  the  extent  of  the  reduction 
of  wages  that  might  be  produced  through  this  influence  would 
depend  upon  the  provisions  of  the  pension  system,  especially 
upon  the  amount  of  the  pension  and  the  conditions  of  eligibil- 
ity. It  is  clear,  for  example,  that  if  large  pensions  were  pro- 
vided for  all  aged  persons,  without  any  restriction  whatever 
as  to  eligibility,  the  effect  must  be  to  lower  wages  in  a  marked 
degree.  With  pensions  of  small  amount  and  stringent  con- 
ditions of  administration,  the  effect  upon  wages  would  be  less 
marked ;  but  even  then  the  existence  of  pensions  would  doubt- 
less operate  as  a  barrier  to  advance  of  wages  which  the  work- 
ing class  might  otherwise  obtain.  It  is  to  be  feared,  therefore, 
that  the  establishment  of  a  subsidized  pension  or  insurance 
system  would  stand  in  the  way  of  realization  of  the  ideal  of 
an  adequate  living  wage.  If  the  State  undertakes  to  support 
aged  workers  in  whole  or  in  part,  the  effect  must  be  to  lower 
proportionately  the  actual  or  potential  rate  of  wages  in  the 
pensioning  State. 

4.     Old  Age  Pensions  and  Pook  Relief. 

One  of  the  main  arguments  urged  in  favor  of  a  pension 
system  is  that  it  would  eliminate  altogether,  or  reduce  greatly, 
the  expenditure  for  poor  relief.  The  contention  is  that  if 
adequate  pensions  for  aged  persons  are  provided  by  the  State, 
almshouses  and  almsgiving  will  become  superfluous.  Some 
of  the  more  enthusiastic  supporters  of  old  age  pensions  go  so 
far  as  to  advance  the  opinion  or  to  encourage  the  expectation 
that  the  establishment  of  a  pension  system  Avould  abolish  the 
poorhouse.  This  idea  finds  expression  in  the  title  of  an  ar- 
ticle on  European  pension  systems,  published  in  a  popular 
magazine  in  1908 :  "  The  Passing  of  the  Poorhouse."  Other 
less  extreme  advocates  of  pensions  merely  argue  that  a  pen- 
sion svstem  would  take  a  lara;e  number  of  inmates  out  of  the 
poorhouses  and  put  them  back  in  their  homes,  and  would,  in 
general,  greatly  reduce  the  outlay  lor  poor  relief. 

The  opinion  that  an  old  age  pension  system  would  dimin- 
ish the  almshouse  population  to  such  an  extent  as  to  pay  for 


1910.]  HOUSE  — No.  1400.  255 

the  cost  of  pensions  was  set  forth  by  the  late  Dr.  Edward 
Everett  Hale  in  the  concluding  paragraph  of  a  pamphlet  on 
''  Old  Age  Pensions."    He  wrote :  — 

As  matters  stand,  the  managers  of  asylums,  whether  for  the  poor 
or  perhaps  for  the  blind  or  the  insane  or  other  invalids,  are  always 
at  their  wit's  ends  to  know  wliat  they  shall  do  with  the  aged  people 
who  are  crowded  upon  them.  The  almshouses  of  towns  and  counties 
are  filled  in  the  same  way.  Now,  all  these  people  are  better  cared 
for  in  the  homes  of  old  neighbors  or  old  friends,  very  possibly  of 
sons  or  of  daughters,  who  would  receive  them  and  take  charge  of 
them  humanely,  if  they  could  receive  a  little  ready  money  for  the 
extra  expense.  As  society  organizes  itself,  a  very  little  money  goes 
a  great  way  in  the  average  household  of  an  American.  The  moment 
that  it  appears  that  a  grandfather  or  a  grandmother  has  $100  a 
year  to  his  good,  that  moment  we  shall  find  that  the  burden  thrown 
upon  the  State  and  town  in  their  asylums  is  reduced  by  a  larger 
proportion  than  by  the  charge  made  by  the  pensions  upon  the 
treasury.  Thus  the  pension  system  has  the  great  advantage  that  it 
maintains  life  in  homes,  and  that  it  abates  the  necessity  for  gi'eat 
institutions  or  asylums. 

The  more  radical  opinion  that  a  pension  system  would 
eliminate  the  necessity  of  any  expenditure  Avhatever  for  poor 
relief  was  put  forward  in  a  report  on  old  age  pensions  issued 
bv  the  Massachusetts  Bureau  of  Statistics  of  Labor,  under  the 
direction  of  the  former  chief  of  the  Bureau,  ]\Er.  Charles 
Felton  Pidgin.  This  report  aimed  to  prove  statistically  that 
the  establishment  of  a  pension  system  providing  $2 GO  a  year 
for  all  persons  over  05  years  of  age  who  made  application  for 
such  pensions  would  do  away  with  the  necessity  of  poor  relief. 
The  report  stated  :  — 

If  this  plan  were  adopted  cities,  towns,  individuals  and  corporation 
societies  would  be  free  from  collecting  and  distributing  money  for 
charitable  purposes.' 

On  the  assunij)ti()n  that  all  cxi)en(liture  for  charitable  pur- 
poses would  be  abolished  by  the  institution  of  a  pension  sys- 
tem, it  was  estimated  that  over  $2,000,000  per  year  would  be 
saved  through  the  adoption  of  such  a  system  in  the  State. 

'  See  report,  Massachusetts  Bureau  of  Statistics  of  Labor,  1905,  p.  144. 


256  OLD   AGE   PENSIONS.  [Jan. 

This  calciilatioiij  it  may  be  noted  in  passing,  was  based  npon 
the  remarkable  assumption  that  only  one  person  out  of  five 
eligible  for  pensions  would  make  application. 

This  reasoning  as  to  the  economy  of  a  j)ension  system 
through  reduction  of  ordinary  expenditure  for  poor  relief 
finds  no  support  in  the  experience  of  States  that  have  estab- 
lished pension  systems.  On  the  contrary,  the  evidence  of 
such  experience  shows  that  the  cost  of  poor  relief  certainly 
does  not  diminish  and  in  some  countries  actually  increases 
after  the  adoption  of  a  pension  system.  The  experience  of 
Denmark,  N^ew  Zealand  and  Germany  in  this  respect  is  most 
instructive. 

In  Denmark  the  establishment  of  the  old  age  pension  sys- 
tem in  1891  was  followed  by  a  reduction  in  the  expenditure 
for  poor  relief  during  the  first  few  years  of  its  operation. 
After  1896,  however,  there  set  in  an  increase  in  the  cost  of 
poor  relief,  which  continued  up  to  1907,  the  last  year  for 
which  the  figures  of  poor  relief  expenditure  could  be  ob- 
tained. The  amount  expended  in  the  latter  year  was  larger 
by  more  than  one-third  than  the  total  for  1896.  At  the  same 
time  the  number  of  beneficiaries  of  the  old  age  pension  fund 
has  increased  rapidly  at  a  rate  exceeding  that  of  the  growth 
of  population,  and  the  expenditure  for  pensions  has  risen  in 
even  greater  proportion.^ 

In  ISTew  Zealand  the  effect  of  the  pension  act  on  expendi- 
ture for  poor  relief  has  been  to  reduce  somewhat  the  amount 
of  expenditure  on  outdoor  relief.  On  the  other  hand,  the  cost 
of  indoor  relief  has  risen  notably  since  the  pension  scheme 
went  into  operation.  The  net  outcome  has  been  a  consider- 
able increase  of  the  total  outlay  on  poor  relief.  The  treasurer 
of  the  colony  of  Victoria  states  that  the  introduction  of  the 
old  age  pension  system  has  had  no  appreciable  effect  on  the 
charitable  institutions  of  that  State.  The  Australian  Royal 
Commission  of  1905  expressed  the  opinion  that  the  adoption 
of  the  pension  systems  in  N'ew  South  Wales  and  in  Victoria 
had  not  appreciably  lowered  the  amounts  voted  for  charitable 
purposes  by  the  governments  of  those  colonies.-^ 

In  Germany  the  burden  of  poor  relief  has  not  been  light- 

1  Ssep.  101.  2  Seep.  112. 


1910.]  HOUSE  — No.  1400.  257 

ened  bv  the  establishment  of  the  compulsory  insurance  sys- 
tem. Evidence  and  testimony  on  this  point  are  presented 
elsewhere  in  this  report.^  It  cannot,  however,  be  statistically 
demonstrated  that  expenditure  for  poor  relief  has  positively 
increased  since  the  institution  of  the  compulsory  insurance 
system.  In  short,  conclusive  statistical  evidence  as  to  the 
financial  effects  of  compulsory  insurance  upon  poor  relief  in 
Germany  cannot  be  produced.  The  fact  that  the  burden  of 
poor  relief  has  not  been  reduced  appreciably  is  sufficient, 
however,  to  disprove  the  claims  put  forward  by  the  more 
enthusiastic  supporters  of  the  pension  policy. 

Such  facts  and  figures  as  are  available  comiDletely  discredit 
the  popular  notion  that  the  adoption  of  a  pension  system 
would  mean  the  passing  of  the  poorhouse.  "Whatever  benefits 
a  pension  system  might  or  might  not  bring,  it  would  not  do 
away  with  almshouses  and  almsgiving.  That  is  one  definite 
conclusion  that  may  be  drawn  from  foreign  experience  with 
pension  systems. 

The  conclusions  of  the  various  committees  which  have 
studied  the  subject  of  old  age  pensions  in  Great  Britain  are 
sisnificant  in  this  connection.  There  is  general  agreement  in 
the  reports  of  these  committees  that  the  expenditure  for  in- 
door relief  would  be  practically  unaffected  by  the  adoption 
of  a  pension  system.  The  first  Eoyal  Commission  on  the 
Aged  Poor,  which  reported  in  1895,  remarked  that,  "  except 
in  crowded  urban  areas,  the  great  majority  of  aged  poor  in 
receipt  of  relief  are  given  outdoor  relief,  while  those  receiving 
indoor  relief  are  usually  persons  for  whom  it  is  necessary,  for 
substantial  reasons.-  Again,  the  Select  Committee  on  Aged 
Deserving  Poor  in  1809  reported  that  "the  evidence  is  clear 
that  the  majority  of  the  inmates  of  the  home  are  in  that  posi- 
tion because  of  sickness  or  infirmity,  which  obliges  them  to  ac- 
cept the  shelter  of  such  an  institution."^  Finally,  the  Select 
Committee  on  the  Aged  Pensioners'  P>ill.  1908,  made  in- 
quiries in  21  poor  law  unions,  which  showed,  in  brief,  that 
only  14  per  cent,  of  almshouse  inmates  over  fio  years  of  age 
could  live  on  a  pension  outside  the  institution  with  relatives 

'  See  pp.  8.3  et  seq. 

'  Report  of  the  commission,  paragraph  47. 

'  Report  of  the  committee,  paragraph  11. 


258  OLD   AGE   PENSIONS.  [Jan. 

who  had  suitable  accommodation  for  them,  and  that  only  10 
per  cent,  were  willing  to  do  so.  It  is  clear  that  the  with- 
drawal of  10  per  cent,  of  the  almshouse  population  would 
leave  the  expenditure  on  indoor  relief,  except  in  respect  to 
actual  food  and  clothing,  substantially  unchanged.  The  com- 
mittee reported  that  "  the  reduction  in  poor  law  expenditure 
will  be  considerably  less  than  has  often  been  represented,  in- 
asmuch as  the  proportion  of  the  aged  poor  who  are  now  or 
may  in  the  future  be  in  the  workhouse,  who  could  with  ad- 
vantage to  themselves  live  outside  with  the  aid  of  a  pension, 
will  probably  be  found  to  be  very  small."  ^ 

The  British  investigating  committees  concluded,  therefore, 
that  the  only  appreciable  saving  in  poor  law  expenditure 
would  be  in  that  part  relating  to  outdoor  relief.  To  what 
extent  saving  could  be  effected  here  depends  upon  the  provi- 
sions of  the  pension  system.  Under  pension  schemes  of  wide 
scope,  without  disqualification  on  account  of  receipt  of  poor 
relief,  the  saving  in  the  cost  of  outdoor  relief  would  be  imme- 
diate and  might  be  considerable.  Under  pension  schemes  of 
a  restricted  character,  with  numerous  conditions  of  eligibil- 
ity for  a  pension,  the  saving  in  the  cost  of  poor  relief  could 
hardly  be  expected  to  amount  to  much.  The  present  British 
pension  act  has  been  in  operation  too  short  a  time  to  furnish 
any  evidence  bearing  on  this  question.  It  is  highly  signifi- 
cant, however,  that  the  burden  of  indoor  pauperism  has  in- 
creased in  Great  Britain  since  1890.  The  Royal  Commission 
on  the  Aged  Poor  report  in  1909  called  attention  to  this  fact, 
and  did  not  hesitate  to  attribute  the  increase  in  some  measure 
to  the  agitation  for  old  age  pensions,  culminating  in  the  en- 
actment of  the  pension  act  of  1908.- 

It  is  not  difiicult  to  understand  why  poor  relief  expendi- 
ture has  not  diminished,  but,  on  the  contrary,  has  rather 
increased  in  countries  having  pension  systems.  A  little  re- 
flection shows  that  this  result  was  one  naturally  to  be  ex- 
pected. In  the  first  place,  a  pension  system  hardly  touches 
the  mass  of  the  almshouse  population.  The  majority  of  in- 
mates of  pauper  institutions  are  there  not  because  of  poverty 

1  Report  of  the  committee,  paragraph  9. 

2  See  p.  307. 


1910.]  HOUSE  — No.  1400.  259 

alone,  but  because  of  disease,  infirmity  or  aftiiction,  which 
necessitates  institutional  residence.     The  grant  of  a  pension 
will  not  take  such  persons  out  of  the  institutions.    It  appears, 
for  example,  that  about  92  per  cent,  of  the  aged  almshouse 
population  in  this  State  are  incapacitated  in  whole  or  in  part. 
This  incapacity  is  found  to  be  a  result  of  sickness  in  71  per 
cent,  of  the  cases,  of  accident  in  15  per  cent.,  and  of  "  Old 
Age  "  in  32  per  cent.     Furthermore,  it  appears  that  less  than 
8  per  cent,  of  the  aged  almshouse  inmates  have  relatives  liv- 
ing who  are  able  or  willing  to  help  support  them.    These  facts 
go  to  show  that  the  establishment  of  a  pension  system  in  this 
State  would  not  result  in  any  considerable  reduction  of  the 
almshouse  population.     In  the  second  place,  the  more  liberal 
policy  of  dealing  with  the  aged  under  a  general  pension  sys- 
tem reacts  also  on  the  methods  of  pauper  relief.     The  ef- 
fect is  to  promote  larger  expenditure  for  charitable  purposes. 
The  pension  system  sets  the  pace  for  a  more  generous  ad- 
ministration of  the  poor  laws.     Finally,  the  tendency  of  a 
pension  system  is  to  cultivate  in  the  population  at  large  a 
disposition  to  rely  upon  the  State,  and  to  take  advantage  of 
opportunities  of  public  assistance  to  the  utmost  degree.     The 
individual  relaxes  his  efforts  to  make  provision  for  himself. 
The  spirit  of  self-reliance,  self-support  and  self-respect  tends 
to  decline.     This  psychological  factor  undoubtedly  has  some- 
thing to  do  with  the  increase  of  poor  law  expenditure  which 
is  observable  in  some  of  the  countries  having  pension  sys- 
tems.    ;Mr.    C.    S.   Loch,   secretary  of  the  London   Charity 
Organization   Society,  in  commenting  upon  the  recent  ten- 
dency of  pauperism  to  increase  in  Great  Britain,  remarks :  — 

The  evidence  is  ample  that  it  is  due  to  that  ]niblic  opinion  which 
of  late  years  has  minimized  the  evils  of  State  dependence  and  the 
responsibilities  of  family  obligation,  and  has  advocated  schemes  for 
old  age  pensions  and  other  measures  that  cannot  but  tend  to  weaken 
the  sense  of  social  duty  and  lower  the  standard  of  personal  inde- 
]iendence  in  the  community.' 

1  "Old  Age  Pensions:  a  collection  of  Short  Papers,"  p.  155 


260  OLD   AGE   PENSIONS.  [Jan. 


VI. 

COST  OF  VAEIOUS  PEXSION  SCHEMES  AS  AP- 
PLIED IN  MASSACHUSETTS. 


The  instructions  of  the  commission  require  it  to  report 
statistics  showing  the  probable  expense  to  the  Commonwealth 
of  the  various  systems  considered,  and  of  any  system  that 
may  be  recommended  for  adoption.  It  is  difficult  to  present 
accurate  statistical  estimates  of  the  cost  of  operating  in  this 
State  pension  schemes  that  have  been  tried  in  other  countries, 
in  which  the  conditions  as  regards  the  standard  of  living  and 
spending,  the  amount  of  old  age  dependency  and  the  eco- 
nomic status  of  the  aged  population  are  very  different  from 
those  in  this  Commonwealth.  No  one  can  tell  precisely  how 
much  any  pension  system  would  cost  until  it  has  been  put 
into  actual  operation.  The  preliminary  estimates  of  cost 
prepared  carefully  by  British  investigating  commissions  and 
official  authorities  all  fell  far  short  of  the  actual  expense  en- 
tailed by  the  old  age  pension  act  of  1908.  The  estimates 
here  presented  of  the  probable  expense  to  this  Commonwealth 
of  operating  various  pension  systems  are  offered  only  as  in- 
dicating the  approximate  cost  of  the  different  systems.  The 
expense  of  administering  the  pension  or  insurance  system  is 
not  included  in  the  following  estimates.  This  would  prob- 
ably amount  to  an  additional  5  per  cent,  on  the  cost  of  any 
scheme  as  here  given. 

(a)  Cost  of  Universal  Non-contributory  Schemes. 
The  scheme  proposed  by  Charles  Booth,  in  England,  calls 
for  pensions  of  7s.  ($1.75)  weekly,  or  £18  4s.  ($91)  per 
year,  for  every  person  70  years  of  age  and  over.  The  num- 
ber of  persons  of  that  age  in  Massachusetts  in  1910  is  esti- 
mated at  105,000.     To  provide  pensions  at  $91  per  year  for 


1910.]  HOUSE  — No.  1400.  261 

that  number  of  persons  would  cost  $9,555,000  annually.  If 
the  scheme  were  extended  to  apply  to  all  persons  65  years  of 
age  and  over,  the  cost  would  be  nearly  doubled.  The  total 
number  of  persons  of  that  age  in  1910  is  estimated  at  177,000. 
The  total  cost  of  pensioning  that  number  of  persons,  at  the 
rate  of  $91,  would  be  $16,107,000  annually. 

The  universal  non-contributory  scheme  proposed  by  the 
late  Dr.  Edward  Everett  Hale  would  cost  somewhat  more 
than  Mr.  Booth's  plan.  The  scheme  proposes  pensions  of 
$100  a  year  for  all  persons  over  69  years  of  age;  that  is,  70 
years  of  age  and  over.  Dr.  Hale  himself  estimated  the  cost 
of  his  scheme  as  follows :  ''  If  we  paid  $100  to  every  citizen, 
man  and  woman,  over  69  years  of  age,  we  should  have  to  pay 
about  $125,000,"  He  was  of  the  opinion  that  a  poll  tax  of 
$2  would  yield  an  amount  entirely  adequate  to  finance  his 
pension  scheme.  The  number  of  persons  over  69  years  of 
age  in  the  State  is  estimated  at  105,000  for  1910.  The  cost 
of  pensioning  that  number  of  persons  at  the  rate  of  $100  per 
year  would  be  $10,500,000  annually,  or  nearly  ninety  times 
as  much  as  the  estimate  given  by  Dr.  Hale.  The  cost  of  the 
scheme,  if  applied  to  persons  65  years  of  age  and  over,  would 
be  increased  to  $17,700,000  per  year.  The  total  number  of 
ratable  polls  in  the  State  is  only  919,783.  A  poll  tax  of  $2, 
if  assessed  and  collected  from  every  person  in  the  State  liable 
to  such  a  tax,  would  yield  only  $1,839,566,  or  less  than  one- 
fifth  of  the  amount  required  to  finance  the  pension  scheme 
proposed  by  Dr.  Hale. 

(b)  Partial  Non-contributory  Schemes. 
The  pension  plan  proposed  in  the  last  bill  introduced  in 
the  Massachusetts  Legislature,  House  No.  1628,  in  1909, 
which  is  substantially  the  measure  that  has  appeared  in  each 
successive  year  since  1904,  provides  for  a  pension  of  $3  per 
week,  or  $156  a  year,  for  citizens  65  years  of  age  and  over, 
under  certain  conditions  of  eligibility  laid  down  in  the  act, 
which  are,  in  brief:  first,  the  ajiplicant  must  not  be  already 
in  receipt  of  a  pension  from  the  State,  or  city,  or  to^^^l ;  sec- 
ond, must  have  paid  a  poll  tax  for  twenty-five  years,  or.  in 
the  case  of  a  woman,  a  lump  sum  equivalent  to  the  amount 


262  OLD   AGE   PENSIONS.  [Jan. 

that  would  have  been  paid  in  poll  taxes  during  twenty-five 
years;  third,  must  not  have  been  convicted  of  felony  within 
five  years ;  fourth,  must  be  certified  in  writing,  by  some  mem- 
ber of  the  General  Court  or  the  Executive  Council,  or  by  a 
selectman,  mayor,  member  of  the  city  council,  treasurer,  audi- 
tor, city  or  town  clerk  of  the  city  or  town  in  which  he  lives, 
to  be  of  good  moral  character  and  not  addicted  to  the  exces- 
sive use  of  intoxicating  liquors ;  fifth,  must  have  been  a  resi- 
dent of  the  Commonwealth  for  ten  years  preceding  his  ap- 
plication. It  is  impossible  to  estimate,  with  any  approach  to 
accuracy,  the  proportion  of  the  177,000  persons  65  years  of 
age  and  over  that  would  be  disqualified  under  these  condi- 
tions of  eligibility.  In  particular,  the  number  of  citizens 
who  have  paid  poll  taxes  for  the  last  twenty-five  years  cannot 
be  figured  even  roughly.  If,  however,  only  one-fifth  of  the 
number  were  able  to  qualify  under  the  act,  namely  35,400, 
the  cost  of  pensioning  that  number,  at  the  rate  of  $156 
per  year,  would  be  $5,522,400.  If  one-third  of  the  number 
should  qualify,  namely,  59,000,  the  cost  would  be  increased 
to  $9,194,000  annually.  It  is  proposed  in  the  pension  bill 
under  consideration  to  raise  the  money  required  to  pay  pen- 
sions by  a  special  poll  tax,  not  to  exceed  $5  per  year.  A 
tax  of  that  amount  assessed  upon  the  total  ratable  polls  in 
the  State,  919,783,  and  actually  collected  from  each  person 
liable,  would  bring  in  $4,598,915  in  revenue.  It  is  pro- 
vided, however,  that  $1  of  each  tax  shall  be  retained  by  the 
city  or  the  town.  This  would  reduce  the  revenue  accruing 
to  the  State  to  about  $3,000,000  annually,  even  if  the  entire 
tax  were  collected.  Thus,  on  the  most  extravagant  estimate 
of  the  possible  revenue  from  the  poll  tax,  there  would  be  a 
deficit  of  about  $2,000,000  on  the  basis  of  the  first  estimate 
of  the  cost  of  the  scheme  as  given  above,  and  a  deficit  of  over 
$5,500,000  on  the  basis  of  the  second  calculation,  which 
would  have  to  be  made  up  out  of  the  State  treasury. 

The  British  old  age  pension  system,  instituted  by  the  act 
of  1908,  is  a  partial  non-contributory  scheme.^  If  the  condi- 
tions of  eligibility  as  laid  down  in  this  act  were  applied  to  the 
population  of  Massachusetts  70  years  of  age  and  over,  the 

1  For  description,  see  pp.  94  et  seq. 


1910.]                        HOUSE  — No.  1400.  263 

number  of  persons  of  different  classes  who  would  be  excluded 
from  the  pension  system  may  be  estimated  as  follows :  — 

1.  Persons  Avbo  have  not  been  residents  of  the  State  for 

twenty  years,        ........  7,980  ^ 

2.  Persons  in  receipt  of  poor  relief:  — 

Indoor, 2,204 

Outdoor,   .........  2,082 

3.  Inmates  of  lunatic  asylums, 1,148 

4.  Inmates  of  correctional  institutions,       ....  179 

5.  Pei-sons  having  yearly  incomes  over  $157..30 :  — 

United  States  pensioners 15,417  ' 

Other  non-dependent  aged,      .....  74,540 ' 


103,550 


It  thus  appears  that  103,550  out  of  the  105,000  persons  TO 
years  of  age  and  over  would  prove  ineligible  for  pensions 
under  a  pension  act  copied  literally  after  the  British.  This 
would  leave  only  1,450  persons  to  be  provided  with  pensions. 
At  the  British  rate  of  $1.25  a  week,  or  $65  a  year,  the  cost 
would  be  only  $94,250.  This  means  that  the  British  old 
age  pension  scheme,  if  strictly  applied  in  this  State,  would 
hardly  touch  the  aged  population  at  all.  In  Great  Britain 
667,000  persons  qualified  for  pensions  under  the  act  within 
eight  months,  and  the  expense  for  the  first  year  was,  roundly, 
$40,000,000.  The  fact  that  so  large  a  number  could  qualify 
under  the  provisions  of  the  act  shows  the  wide  difference  be- 
tween the  economic  condition  of  the  aged  population  in  Great 
Britain  and  in  this  State.  The  maximum  income  provision 
of  $157.50  would  alone  debar  four-fifths  of  the  aged  popu- 
lation in  this  State.  In  Great  Britain  this  provision  per- 
mitted more  than  oue-half  of  the  population  70  years  of  age 
and  over  to  qualify  for  pensions. 

A  fairer  estimate  of  the  probable  cost  of  applying  a  par- 
tial non-contributory  pension  system  like  the  British  in  this 

'  This  number  is  estimated  according  to  the  percentage  of  aged  persons  of  less  than 
twenty  years  residence  in  the  State,  as  shown  by  the  returns  gathered  in  the  investiga- 
tion hv  this  commission,  namely,  7.6. 

-  The  United  States  pensioners  presumably  all  have  incomes  m  excess  of  the  maxi- 
mum fixed  in  the  British  act.  ,     .       -r.  e 

'  This  figure  is  obtained  by  applying  to  the  non-dependent  ponulation  /O  years  ot 
age  and  over,  which  numbers  SO, 462.  the  percentage  of  persons  of  this  class  who  gave 
their  weekly  incomes  as  S3  or  less  in  the  returns  gathered  in  the  investigation  by  this 
commission,  namely,  7.36. 


264  OLD   AGE   PENSIONS.  [Jan. 

Commonwealth  can  be  made  by  assuming  that  the  conditions 
of  eligibility,  especially  as  regards  income  and  the  amount 
of  the  pensions,  would  be  conformed  to  American  standards. 
The  percentage  of  the  population  70  years  and  over  that 
qualified  for  pensions  in  Great  Britain  was  rather  more  than 
one-half.  Applying  a  similar  percentage  in  Massachusetts, 
the  number  of  persons  who  would  come  under  the  provisions 
of  a  pension  act  similar  to  the  British  would  be  not  less  than 
50,000.  If  the  amount  of  the  pension  were  fixed  at  $200 
a  year,  the  scheme  would  cost  about  $10,000,000  annually. 
This  is  doubtless  the  lowest  amount  that  could  safely  be  set 
as  the  j^robable  cost  of  a  partial  non-contributory  pension 
scheme  in  this  State. 

(c)    Compulsory  Contributory  Insurance,  with  State  Subsidy. 

The  typical  scheme  of  this  class  is  the  German  system  of 
old  age  insurance.^  It  is  difficult  to  calculate  the  cost  of  ap- 
plying such  a  system  in  this  Commonwealth.  It  is  practically 
useless  to  estimate  carefully  the  expense  of  applying  an  exact 
rej^lica  of  the  German  scheme,  as  regards  the  amount  of  con- 
tributions by  the  employer,  the  employee  and  the  State,  and 
the  amount  of  the  pensions.  The  latter  is  far  too  small  for 
American  standards  of  living,  the  maximum  pension  being 
less  than  $60,  and  the  average  amount  only  $40,  annually. 
The  approximate  cost  of  a  compulsory  contributory  system  of 
old  age  insurance  like  the  German  may,  perhaps,  best  be  indi- 
cated in  the  following  manner:  In  Germany  the  number  of 
persons  drawing  old  age  pensions  was,  in  1907,  116,887,  out 
of  a  population  of  60,000,000.  This  means  195  pensioners 
per  each  100,000  of  population.  In  Massachusetts  this  pro- 
portion would  give  only  5,850  pensioners,  as  the  population 
of  the  State  is  roundly  3,000,000.  To  pay  pensions  of  $40  a 
year  to  5,850  persons  would  cost  only  $234,000.  To  provide 
pensions  of  three  times  that  amount,  which  would  hardly  be 
more  than  the  proper  equivalent  of  the  German  rate,  would 
cost  $702,000.  Of  this  total,  the  State  would  pay,  according 
to  the  German  method  of  dividing  the  expenses,  approxi- 
mately one-third,  or  about  $78,000,  on  the  basis  of  the  first 

'  For  description,  see  pp.  80  et  seq. 


1910.]  HOUSE  — No.  1400.  265 

calculation  just  given;  $234,000  on  the  basis  of  the  sec- 
ond calculation.  In  Germany  the  State's  share  of  the  total 
amount  paid  in  both  old  age  and  invalidity  annuities  in  1907 
was  only  $12,348,009.08.  The  equivalent  expenditure  in 
Massachusetts  proportional  to  the  population  would  be  about 
$617,500. 

(d)  Voluntary  Contributory  Insurance,  with  State  Subsidy. 
The  Belgian  system  of  old  age  relief  is  typical  of  this  class 
of  schemes.^  Manifestly,  the  cost  of  any  voluntary  scheme 
with  a  State  subsidy  can  only  be  approximated.  All  depends 
on  the  extent  to  which  the  population  participates  in  the  plan. 
In  Belgium  the  nimiber  of  pensioners  in  1906  was  850,000, 
out  of  a  population  of  7,238,622.  Each  participant  can 
obtain  at  least  9  francs,  or  $1.80,  in  premiums  paid  by  the 
State  each  year.  This  means  a  total  payment  by  the  State  of 
$1,530,000.  As  the  population  is  two  and  a  third  times  as 
large  as  that  of  Massachusetts,  the  proportionate  expenditure 
in  this  State  would  be  only  $600,000.  Even  if  the  amount  of 
premiums  were  trebled,  the  cost  would  be  only  $1,800,000 
annually. 

(e)     General  Estimates. 

The  expense  of  a  pension  system  in  this  State  may  be 
further  illustrated  by  the  following  figures :  — 

To  provide  pensions  of  $200  a  year  for  the  entire  popula- 
tion 65  years  of  age  and  over,  namely,  177,000,  would  cost 
$35,400,000  annually.  To  provide  pensions  of  that  amount 
for  the  entire  population  70  years  of  age  and  over,  namely, 
105,000,  would  cost  $21,000,000  annually.  To  provide  pen- 
sions of  $100  a  year  for  the  entire  population  65  years  of  age 
and  over  would  cost  $17,700,000  annually.  To  provide  pen- 
sions of  $100  a  year  for  the  entire  population  70  years  of  age 
and  over  would  cost  $10,500,000  annually. 

To  provide  pensions  of  $200  a  year  for  one-half  the  popula- 
tion 65  years  of  age  and  over,  namely,  88,500,  would  cost 
$17,700,000  annually.  To  provide  pensions  of  $200  a  year 
for  one-half  the  population  70  years  of  age  and  over,  namely, 
52,500,  would  cost  $10,500,000  annually.     To  provide  pen- 

•  For  description,  see  pp.  101  el  aeq. 


266  OLD   AGE   PENSIONS.  [Jan. 

sioiis  of  $100  a  year  for  one-half  the  population  65  years  of 
age  and  over  would  cost  $8,850,000  annually.  To  provide 
pensions  of  $100  a  year  for  one-half  the  population  70  years 
of  age  and  over  would  cost  $5,250,000  annually. 

To  provide  pensions  of  $200  a  year  for  one-fourth  the  popu- 
lation 65  years  of  age  and  over,  namely,  44,250,  would  cost 
$8,850,000  annually.  To  provide  pensions  of  $200  a  year 
for  one-fourth  the  population  70  years  of  age  and  over, 
namely,  26,250,  would  cost  $5,250,000.  To  provide  pensions 
of  $100  a  year  for  one-fourth  of  the  population  65  years  of  age 
and  over  would  cost  $4,425,000.  To  provide  pensions  of 
$100  a  year  for  one-fourth  of  the  population  70  years  of  age 
and  over  would  cost  $2,625,000. 

To  provide  pensions  of  $200  a  year  for  18,465  persons, 
the  estimated  number  of  deserving  non-dependent  aged  poor 
and  aged  dependents  upon  public  and  private  charity  65  years 
of  age  or  over  in  the  State,  ^  would  cost  $3,693,000  annually. 
To  provide  pensions  of  $100  a  year  for  this  number  would 
cost  $1,846,500  annually.  To  provide  pensions  of  $200  a 
year  for  12,000,  the  estimated  number  of  prospective  pen- 
sioners 65  years  of  age  and  over  in  the  State,  exclusive  of  the 
aged  dependents  on  public  charity,  —  the  pauper  class  proper, 
—  would  cost  $2,400,000  annually.  To  provide  pensions  of 
$100  a  year  for  this  number  would  cost  $1,200,000  annually. 

The  effect  of  pensions  expenditure  on  local  tax  rates  is 
shown  in  the  following  table,  in  which  the  increase  of  the 
tax  rates  is  calculated:  first,  on  the  basis  of  an  expenditure 
of  $17,700,000  annually,  the  amount  required  to  provide 
pensions  of  $200  a  year  for  one-half  the  population  65  years 
of  age  and  over,  or  of  $100  a  year  for  the  total  population  of 
that  age;  second,  on  the  basis  of  an  expenditure  of 
$10,500,000  annually,  the  amount  required  to  provide  pen- 
sions of  $200  a  year  for  one-half  the  population  70  years  of 
age  or  over,  or  pensions  of  $100  a  year  for  the  entire  popula- 


tion of  that  age. 


I  See  p.  51. 


1910.1 


HOUSE  — No.  1400. 


267 


Effect  of  Pension  Expenditures  on  Tax  Rates. 


TOWN  OR  CITY. 


Boston,  . 

Barre, 

Brookline, 

Greenfield, 

Lowell,   . 

Springfield, 


> 


$16  50 
15  00 
10  50 
15  20 
19  60 
14  80 


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$5  92 
6  12 
6  02 

5  03 

6  17 
4  93 


$21  22 
19  88 
15  30 
19  21 
24  52 
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4  13 
4  06 

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4  16 
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oS 


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$19  30 
17  89 
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17  58 
22  51 
17  13 


111  the  foregoing  estimates  no  account  has  been  taken  of 
any  possible  reduction  of  expenditures  on  ordinary  poor  relief 
through  the  establishment  of  a  pension  system,  as  diminishing 
the  net  cost.  For  reasons  already  set  forth,  it  is  hardly  to  be 
expected  that  the  adoption  of  a  pension  scheme  would,  in  the 
long  run,  reduce  poor  relief  expenditures.  The  experience  of 
countries  that  have  tried  the  pension  policy  shows  that  no 
saving  on  this  score  can  be  counted  upon  to  offset  in  part  the 
expenses  of  the  pension  plan.  The  only  form  of  poor  relief 
expenditure  that  would  be  reduced  appreciably,  even  during 
the  first  years  of  the  operation  of  a  pension  system,  is  that  of 
outdoor  relief.  The  total  amount  now  spent  on  outdoor  relief 
for  aged  persons  by  public  and  private  agencies  in  the  State 
has  been  estimated  at  $510,808.08.  Assuming  that  this  out- 
lay would  be  reduced  one-half  by  the  adoption  of  a  pension 
system,  which  is  undoubtedly  an  extreme  estimate,  the  saving 
would  amount  to  $255,449.04.  This  sum  is  insignificant 
when  set  against  the  millions  that  any  general  pension  system 
would  cost. 


268  OLD   AGE   PENSIONS.  [Jan. 


VII. 
THE  QUESTION  OF  MUNICIPAL  PENSIONS. 


1.     The  Nature  of  the  Problem. 

The  reality  and  the  urgency  of  the  problem  of  pensions  for 
municipal  employees  cannot  be  disputed.  The  continuance 
of  men  in  municipal  service  after  they  have  outlived  their 
usefulness  in  the  positions  in  which  they  are  employed  means 
waste  of  the  taxpayers'  money  and  demoralization  of  the 
working  force.  To  discharge  outright  aged  workers  who 
have  been  in  the  employ  of  the  city  for  a  long  period  of  years 
is  manifestly  a  harsh  course,  which  the  city,  as  an  employer 
of  labor,  cannot  afford  to  sanction  by  its  example.  Many 
private  employers,  both  individual  and  corporate,  have  recog- 
nized the  need  and  the  wisdom  of  making  some  provision  for 
the  retirement  of  superannuated  employees  on  allowances,  and 
have  established  pension  systems.  The  spread  of  the  pension 
idea  among  railway  and  other  corporations  during  the  last 
decade  is  a  most  interesting  development  in  the  industrial 
world.  The  same  reasons  that  have  induced  private  employers 
to  make  special  provision  for  the  retirement  of  aged  workers 
would  seem  to  hold  good  in  the  case  of  municipalities. 

These  reasons  are  partly  economic  and  partly  humani- 
tarian. Regarded  from  an  economic  point  of  view,  the  ad- 
vantages of  a  pension  system  consist  in  the  elimination  of  the 
waste  and  demoralization  connected  with  the  employment,  at 
full  wages,  of  old  men  who  are  no  longer  capable  of  rendering 
reasonably  efficient  service ;  and,  further,  in  the  promotion  of 
a  sentiment  of  loyalty  and  appreciation  on  the  part  of  the 
working  staff.  The  economic  gain  from  these  sources  is 
regarded  by  large  employers  as  sufficient  to  make  up  for  the 
expense  of  operating  a  pension  system.  The  humanitarian 
motive  recognizes  the  fact  that  long-continued  service  estab- 


1910.]  HOUSE  — No.  1400.  269 

lishes  some  claim  to  generous  treatment  of  the  employee  in  his 
old  age,  which  prohibits  the  humane  employer  from  turning 
his  aged  workers  adrift  without  adequate  means  of  support. 
Thus,  considerations  of  economy  and  fair  play  have  brought 
about  the  introduction  and  extension  of  pension  systems  in  the 
case  of  railways  and  other  large  corporate  and  individual 
employers  of  labor. 

Much  is  also  made  by  the  advocates  of  pensions  for  munici- 
pal employees  of  the  fact  that  many  cities  have  already 
adopted  the  pension  policy  in  the  case  of  the  police  and  fire 
departments  and  the  teachers  in  the  public  schools.  It  is  held 
that  justice  demands  the  extension  of  the  pension  system  to 
employees  in  other  municipal  departments.  Indeed,  the  need 
of  a  pension  system,  from  the  point  of  view  of  the  employees, 
is  declared  to  be  greater  in  the  case  of  the  common  laborers 
and  the  lower  ranks  of  employees  in  general  than  in  the  ease 
of  the  higher-paid  members  of  the  police  and  fire  departments 
and  the  teaching  staff  of  the  public  schools. 

The  arguments  urged  in  ojDposition  to  the  establishment  of 
some  system  of  municipal  pensions  may  be  stated  thus :  — 

1.  Provision  for  old  age  and  for  the  emergencies  of  life  is 
a  matter  of  individual  concern,  which  should  be  left  to  the 
initiative  of  the  employees  themselves.  This  consideration 
has  special  force  in  the  case  of  municipal  employees.  They 
are  a  specially  favored  class,  who  have  less  need  of  pension 
provisions  than  have  wage  earners  in  general.  They  are  com- 
paratively well  paid,  and  should  be  able  to  provide  for  their 
old  age  out  of  their  independent  savings.  The  city  should 
not  be  called  upon  to  provide  for  them  in  the  proposed  manner. 
In  answer  to  this  objection,  it  is  argued  that,  whether  the 
employees  ought  to  do  so  or  not,  as  a  matter  of  fact  they  do 
not  make  adequate  individual  provision  for  old  age.  The 
city  must  either  assist  them  to  do  this  in  some  way,  or  must 
continue  to  face  the  awkward  dilemma  of  keeping  worn-out 
employees  on  the  pay  roll,  or  of  turning  them  adrift  without 
support  in  their  old  age.  The  city  must,  it  is  contended,  take 
the  same  course  as  have  the  progressive  railway  and  industrial 
corporations  which  have  introduced  pensions  for  their 
employees. 


270  OLD   AGE   PENSIONS.  [Jan. 

2.  The  establishment  of  a  pension  system  will  add  largely 
to  the  tax  rate  of  the  cities,  which  is  already  burdensomely 
high.  At  a  time  when  retrenchment  of  mmiicipal  expendi- 
tures is  every^vhere  conceded  to  be  imperative  the  assumption 
of  a  heavy  anmial  outlay  for  pensions  is  doubly  indefensible. 
To  this  argument  the  answer  is  offered  that  the  present 
method  of  carrying  worn-out  employees  on  the  pay  roll  at  full 
wages  is  more  expensive  than  any  pension  system  could 
possibly  be.  The  cost  and  waste  of  the  present  method  in  the 
city  of  Boston,  as  well  as  the  need  and  scope  of  a  pension  plan 
applied  to  the  municipal  service  of  the  city,  are  indicated  by 
certain  returns  prepared  in  December,  1908,  at  the  request  of 
the  mayor. 

The  returns  show  the  following  facts  regarding  the  number 
of  pensionable  employees,  their  length  of  service,  compensa- 
tion and  efficiency :  — 

The  total  number  of  employees  over  65  years  is  491 ;  over 
70  years,  168.  The  number  of  employees  pensionable  at  the 
latter  age  is  thus  65  per  cent,  less  than  that  at  the  former. 
The  amount  of  compensation  paid  to  employees  over  65  is 
$419,888.45;  over  70,  $273,000.  The  number  over  65  re- 
ported as  inefficient  is  296.  The  compensation  paid  to  this 
group  is  $200,194.35. 

The  percentage  of  inefficient  employees  among  the  em- 
ployees over  65  years  is  strikingly  large  in  many  depart- 
ments. For  example,  in  the  cleaning  and  watering  division 
of  the  street  department  35  are  employed,  of  whom  all  are 
reported  inefficient;  in  the  cemetery  department  16  persons 
over  65  years  are  employed,  of  whom  all  are  reported  as 
inefficient ;  in  the  park  department  27  are  employed,  of  whom 
24  are  inefficient. 

The  period  of  service  is  over  30  years  in  the  case  of  119 
employees  over  65,  or  25  per  cent,  of  the  total.  Only  5  per 
cent.,  or  42  persons,  have  been  in  the  employ  of  the  city  less 
than  five  years. 

The  leading  departments,  in  respect  to  number  of  pension- 
able employees,  rank  as  follows:  (1)  paving  division  of  street 
department,  109  over  65  years;  (2)  water  department,  65; 
(3)    sanitary   division,    street    department,    58;    (4)    sewer 


1910.]  HOUSE  — No.  1400.  271 

division,  street  department,  47;  (5)  cleaning  and  watering 
division,  street  department,  35;  (6)  park  division,  27;  (7) 
ferry  division,  street  department,  26;  (8)  cemetery  depart- 
ment, 16. 

If  it  be  admitted  that  some  system  of  pensions  for  munic- 
ipal employees  should  be  devised  and  adopted,  the  question 
at  once  arises  whether  the  system  should  be  contributory  or 
non-contributory ;  that  is,  should  the  expense  of  operation  be 
borne  entirely  by  the  municipality,  out  of  the  moneys  raised 
by  taxation,  or  wholly  or  partly  by  the  beneficiaries  themselves 
through  payments  to  the  pension  fund?  There  is  a  sharp 
difference  of  opinion  on  this  point. 

In  favor  of  the  contributory  principle,  it  is  urged  that 
municipal  employees  receive  good  wages,  and  ought  to  main- 
tain their  own  pension  fund,  at  least  in  considerable  part ;  that 
the  non-contributory  plan  would  enormously  increase  the 
expense  of  operating  any  pension  system ;  that  purely  gratu- 
itous pensions  for  aged  workers  would  have  a  demoralizing 
eft'ect  on  the  beneficiaries;  that  the  adoption  of  this  policy 
by  the  cities  would  set  an  unfortunate  example  for  private 
employers,  and  would  give  impetus  to  a  movement  in  favor  of 
the  introduction  of  non-contributory  State  pensions  for  all 
aged  persons. 

Against  the  contributory  plan,  and  in  favor  of  the  non- 
contributory  principle,  it  is  urged  that  an  obligation  rests 
upon  the  city,  as  upon  any  employer  of  labor,  to  take  care  of 
the  men  who  have  worn  themselves  out  in  its  service ;  that  the 
average  employee  does  not  earn  enough  to  save  adequately  for 
old  age;  that,  consequently,  it  would  in  many  cases  involve 
serious  hardship  to  withhold  part  of  the  employees'  pay  for 
contribution  to  the  pension  fund ;  that  the  non-contributory 
principle  has  already  been  adopted  in  a  great  majority  of  the 
pension  systems  operated  by  railways  and  industrial  corpora- 
tions, as  well  as  in  the  pension  systems  for  municipal  police 
and  fire  departments. 

The  further  question  whether  participation  in  the  pension 
system  should  be  compulsory  or  voluntary,  need  not  be  con- 
sidered in  detail  in  this  connection.  The  arguments  here  are 
substantiallv  the  same  on  both  sides  as  those  alreadv  reviewed 


272  OLD   AGE   PENSIONS.  [Jan. 

ill  connection  with  the  question  of  a  compulsory  or  a  voluntary 
system,  in  general.  It  would  be  superfluous,  accordingly,  to 
present  these  arguments  again  in  this  place. 

2.     Pension  Systems  in  American  Cities. 

As  no  State  has  enacted  any  pension  measure  providing 
for  all  classes  of  municipal  employees,  so  no  city  has  estab- 
lished any  general  system  of  municipal  pensions.  The  pen- 
sion schemes  in  existence  provide  only  for  certain  classes  of 
city  employees,  especially  policemen,  firemen  and  teachers. 
These  schemes  are  largely  non-contributory  in  character ;  that 
is,  the  pensions  are  paid  out  of  municipal  funds,  without  con- 
tribution from  the  employees. 

A  circular  of  inquiry  sent  out  to  94  cities  in  the  country, 
outside  of  Massachusetts,  having  a  population  of  25,000  or 
over,  brought  56  replies.  Of  the  56  cities  from  which  replies 
were  received,  25  reported  that  no  pensions  of  any  kind  were 
paid  to  public  employees.  Of  the  31  cities  having  pension 
schemes  of  some  sort,  28  cities  pension  policemen;  28  cities, 
not  in  all  cases  identical  with  the  preceding,  pension  firemen ; 
and  11  cities  pension  teachers.  Grouping  the  31  cities  accord- 
ing to  the  extent  of  the  pension  provisions,  it  appears  that  9  of 
the  cities  have  pension  schemes  for  policemen,  firemen  and 
teachers ;  16  for  policemen  and  firemen ;  2  for  policemen  and 
teachers ;  3  for  firemen  alone ;  1  for  policemen  alone. 

Another  circular  of  inquiry  was  sent  out  to  Massachusetts 
cities.  Replies  were  received  from  30  out  of  33  cities  in  the 
State.  Of  the  30  cities  furnishing  information,  18  have  no 
pension  system  whatever,  not  having  accepted  any  of  the  State 
laws  relating  to  the  pensioning  of  policemen,  firemen  and 
teachers.  Of  the  12  cities  which  have  adopted  pension  sys- 
tems of  some  kind,  7  pay  pensions  to  policemen  and  firemen, 
3  to  policemen  only,  and  2  to  firemen  only.  The  number  of 
pensioners  reported  as  on  the  pay  roll  of  cities  is  526,  includ- 
ing 474  in  Boston  and  52  in  other  cities.^ 

1  Cities  having  no  pension  systems  are:  Beverly,  Chioopee,  Fall  River,  Fitchburg, 
Haverhill,  Marlborough,  Melrose,  New  Bedford,  Newbur>'port,  Newton,  Northampton, 
Pittsfield,  Quincy,  Salem,  Soringfield,  Taunton,  Woburn  and  Worcester.  Boston, 
Cambridge,  Chelsea,  Everett,  Lowell,  Maiden  and  Somerville  pension  policemen  and 
firemen.  Holyoke,  Medford  and  Waltham  pension  policemen  only.  Brockton  and 
North  Adams  pension  firemen  only.  No  replies  were  received  from  Gloucester,  Law- 
rence and  Lynn. 


1910.]  HOUSE  — No.  1400.  273' 

A  description  of  the  pension  provisions  for  policemen,  fire- 
men and  teachers  in  New  York  and  in  Boston  will  serve,  in 
connection  with  the  foregoing  analysis  of  the  State  legislation 
on  this  subject,^  to  give  an  adequate  picture  of  municipal 
pension  systems  in  this  country. 

(a)    New  York. 

Policemen.  —  The  police  pension  fund  is  made  up  as  fol- 
lows :  (1)  funds  of  this  class  previously  existing  in  the  munic- 
ipalities combined  to  make  the  present  city  of  New  York; 
(2)  fines  imposed  by  the  police  department  upon  members  of 
the  force;  (3)  all  rewards  and  gifts  to  members,  except  such 
as  they  may  be  allowed  by  the  police  commissioner  to  retain ; 
(4)  all  lost,  unclaimed,  or  stolen  money  remaining  in  the 
possession  of  the  property  clerk  of  the  department  for  one 
year,  and  all  money  received  from  the  sale  of  unclaimed 
property  or  condemned  property  of  the  department;  (5)  all 
sums  withheld  from  members  of  the  force  through  absence 
from  duty;  (6)  certain  specified  quarterly  payments  out  of 
receipts  from  liquor  licenses ;  (T)  all  money  received  from  the 
issue  of  permits  to  carry  pistols  ;  (8)  all  receipts  from  licenses 
to  give  masked  balls,  entertainments  or  parties;  (9)  2  per 
cent,  of  the  monthly  compensation  of  each  member  of  the 
police  force,  to  be  deducted  by  the  comptroller  from  the  pay ; 
(10)  various  other  specified  sums  coming  from  different 
sources. 

In  case  the  amount  derived  from  the  sources  mentioned  is 
insufficient  to  pay  the  pensions  authorized  under  the  act,  the 
remainder  is  appropriated  out  of  the  general  treasury. 

The  power  to  retire  on  pension  is  vested  in  the  police  com- 
missioner. As  in  the  case  of  the  firemen's  retirement  system, 
a  member  of  the  force  may  be  pensioned  for  disability  at  any 
age.  A  member  disabled  in  the  actual  performance  of  duty, 
without  misconduct  on  his  part,  receives  a  pension  of  not 
more  than  one-half,  nor  less  than  one-third,  of  his  regular  pay. 
A  member  who  becomes  superannuated  after  ten  years  but 
less  than  twenty-five  years  of  membership  in  the  force,  so  as 
to  be  unfit  for  duty,  is  pensioned  at  the  same  rate.  Pensions 
are  also  granted  to  the  dependent  parents  or  widows  of  mem- 


*  See  pp.  128  et  aeq. 


274  OLD   AGE   PENSIONS.  [Jan. 

bers  killed  in  the  performance  of  duty,  of  not  more  than  $600 
per  annum,  and  to  the  widows  of  members  dying  in  the 
service  after  ten  years,  of  not  more  than  $300,  Surviving 
children  under  18  years  of  age  are  also  provided  for,  the 
amount  of  the  allowance  not  to  exceed  $600  per  annum. 

Any  member  of  the  force  who  has  reached  the  age  of  55 
years  and  has  served  for  twenty  years  may  be  retired  upon  his 
own  application,  and  any  such  member  who  is  certified  as  per- 
manently disabled  shall  be  so  retired,  the  pension  in  each  case 
to  be  not  less  than  one-half  of  the  salary.  Any  member  of  the 
age  of  55  years  who  has  served  twenty-five  years  must  be  re- 
tired upon  his  application,  with  half-pay.  Finally,  any  vet- 
eran of  the  civil  war  who  has  reached  the  age  of  60  years  may 
be  retired  in  like  manner. 

Firemen.  —  The  fire  department  relief  fund  is  made  up  of 
the  following  sums :  (1)  funds  of  this  class  previously  held  in 
the  various  municipal  corporations  consolidated  into  the 
present  city  of  New  York;  (2)  all  fines  imposed  upon  mem- 
bers of  the  department;  (3)  all  rewards  or  gifts  on  account 
of  extraordinary  service  of  any  member  of  the  force,  except 
such  as  the  commissioner  may  permit  the  recipient  to  retain ; 
(4)  all  proceeds  of  suits  for  penalties,  and  all  license  fees 
payable  under  the  fire  ordinances ;  (5)  all  proceeds  of  sales  of 
condemned  horses  and  other  property  in  use  in  the  depart- 
ment ;  ( 6 )  all  money  forfeited  or  withheld  from  any  member 
of  the  force  on  account  of  absence  from  duty,  except  by  reason 
of  sickness  or  disability;  (7)  10  per  cent,  of  the  liquor  license 
fees  of  the  city. 

Any  member  of  the  force  may  be  retired  by  the  fire  commis- 
sioner for  disability,  either  total  or  partial.  In  case  of  total 
permanent  disability  induced  by  actual  performance  of  duty, 
or  occurring  after  ten  years  of  service  in  the  department,  the 
annual  pension  is  one-half  of  the  compensation  received  at  the 
date  of  retirement.  In  case  of  total  permanent  disability  not 
caused  by  actual  performance  of  duty,  or  occurring  before 
ten  years  of  service,  the  pension  is  one-third  of  the  pay.  In 
case  of  partial  permanent  disability  caused  by  actual  per- 
formance of  duty,  or  occurring  after  ten  years  of  service,  the 
member  is  assigned  to  light  service  in  the  department,  and 


1910.]  HOUSE  — No.  1400.  275 

given  one-half  par.  In  case  of  partial  permanent  disability 
not  so  caused,  or  occurring  before  ten  years  of  service,  the 
member  i§  assigned  to  light  duty,  and  receives  only  one-third 
pay.  Furthermore,  any  member  of  the  force  who  has  served 
for  twenty  years  shall,  upon  his  application,  submitted  with 
proof  of  permanent  disability,  be  retired  and  pensioned  at  the 
rate  of  not  less  than  one-half  of  his  previous  pay.  Pensions 
are  also  provided  for  widows  and  children  or  dependent 
parents  of  deceased  firemen,  the  amount  to  be  determined 
by  the  trustee  of  the  relief  fund,  but  not  in  any  case  to  exceed 
$300  in  any  one  year.  The  widow  of  a  fireman  killed  in  the 
service  receives  a  pension  of  one-half  of  the  salary  of  the 
deceased.  Annual  allowances  are  also  'provided  for  the  sur- 
viving children  under  18  years  of  age  or  dependent  parents  of. 
the  members  w^ho  die  leaving  no  widow,  the  amount  of  such 
allowance  not  to  exceed  the  sum  of  $500  in  any  case. 

A  life  insurance  fund  is  also  maintained  for  the  benefit  of 
members  of  the  fire  department,  to  which  they  may  contribute 
and  provide  additional  insurance  for  themselves  and  families. 

Teachers.  —  The  teachers'  retirement  fund  is  made  up  of 
the  following  amounts:  (1)  all  sums  forfeited  or  deducted 
from  the  pay  of  teachers  for  any  cause;  (2)  all  receipts  from 
gifts  and  bequests;  (3)  5  per  cent,  of  the  annual  receipts  from 
liquor  licenses;  (4)  1  per  cent,  of  the  salaries  of  teachers. 

A  board  of  retirement  is  constituted  to  administer  the  act. 
On  the  recommendation  of  this  board,  any  teacher  who  is 
incapacitated  for  performance  of  duty,  and  has  served  for 
twenty  years,  may  be  retired  by  the  board  of  education.  Any 
teacher  who  has  reached  the  age  of  65  years,  and  has  served 
thirty  years,  may  be  retired  by  the  board  of  education  without 
such  recommendation.  Any  teacher  who  has  served  for  thirty 
years  may  be  retired  upon  his  own  application  by  the  board  of 
education. 

The  amount  of  annuity  in  case  of  a  teacher  retired  after 
thirty  years  of  service  is  one-half  the  annual  salary,  but  shall 
not  be  less  than  $G00.  In  case  of  a  teacher  retired  after  less 
than  thirty  years  of  service,  the  amount  of  annuity  shall  bear 
the  same  ratio  to  the  annuity  provided  for  the  thirty-year  class 
which  the  length  of  the  service  bears  to  that  period. 


276  OLD    AGE   PENSIONS.  [Jan. 


(b)    Boston. 

Policemen.  —  At  present  tlie  following  acts  relating  to 
policemen's  pensions  in  Boston  are  in  force:  Acts  of  1887, 
chapter  178  ;  acts  of  1892,  chapter  353  ;  Acts  of  1893,  chapter 
51;  Acts  of  1898,  chapter  172;  Acts  of  1900,  chapter  306. 
In  some  cases  later  acts  cover  parts  of  the  earlier  laws,  but 
they  do  not  repeal  the  latter.  The  essential  provisions  of  the 
pension  system  as  at  present  administered  are  as  follows :  — 

1.  Any  member  of  the  department  (a)  who  is  certified  by 
the  city  physician  to  be  incapacitated  mentally  or  physically, 
and  (&)  who  has  served  fifteen  years  consecutively  in  the  de- 
partment, may  by  a  "imanimoiis  vote  of  the  board  be  retired 

•on  half  pay,  or  any  less  sum  that  seems  just  to  the  board. ^ 

2.  Any  member  who  is  certified  by  the  physician  of  the 
board  of  health  to  be  permanently  incapacitated  mentally  or 
physically  by  injuries  sustained  in  the  actual  performance  of 
his  duty,  shall  be  retired  on  half  pay.^ 

3.  Any  member  (a)  who  in  the  judgment  of  the  board  is 
incapacitated  for  service,  and  (&)  who  has  served  twenty 
years  in  the  department,  at  his  own  request  and  with  the 
mayor's  approval,  may  be  retired  on  half  pay  by  a  majority 
vote  of  the  board. 

4.  Any  member  who  has  reached  the  age  of  65  years,  except 
a  soldier  or  sailor  of  the  civil  war,  shall,  with  the  mayor's 
approval,  be  retired  on  half  pay. 

5.  Any  member  (a)  who  was  a  civil  war  soldier  or  sailor, 
and  (h)  who  is  60  years  old,  or  (c)  who  has  served  twenty 
years  in  the  department,  shall  at  his  own  request  be  retired  on 
half  pay.^ 

6.  Any  member  (a)  who  is  60  years  old,  and  (h)  who  has 
performed  twenty-five  years  of  active  service  in  the  depart- 
ment, shall,  at  his  own  request,  be  retired  on  half  pay. 

7.  The  widow  until  she  marries  again,  or,  if  no  widow,  the 
children  under  16  years  of  age,  of  any  member  who  dies  from 
injuries  received  while  in  the  discharge  of  his  duty,  may 


1  Acts  of  1887,  chapter  178;  Acts  of  1893,  chapter  51. 

2  Acts  of  1892,  chapter  353. 

3  Acts  of  1898,  chapter  172. 


1910.]  HOUSE  — No.  1400.  277 

receive  an  anniiitv  of  $300  or  less,  as  the  board  may  deter- 
mine.^ 

It  is  to  be  noted  that  the  powers  vested  in  the  board  of  police 
are  now  exercised  bv  a  sins-le  commissioner.- 

Firemen.  —  The  pension  system  was  established  by  chapter 
347  of  the  Acts  of  1892.  Under  the  provisions  of  this  law 
any  member  of  the  fire  department  (a)  who  has  become  dis- 
abled in  the  performance  of  duty,  certified  by  the  city 
physician,  or  (b)  who  has  performed  service  for  at  least  fif- 
teen consecutive  years,  may  be  retired  on  pension  by  the  board 
of  fire  commissioners.  In  case  of  total  disability,  the  amount 
of  the  pension  is  two-thirds  of  the  pay ;  otherwise,  the  pension 
of  members  of  the  permanent  iorce  who  have  served  fifteen 
years  is  not  to  exceed  one-half  of  the  pay,  and  the  pension  of 
members  of  the  call  force  who  have  served  fifteen  years  is  fixed 
at  one-half  of  the  pay.  It  is  further  provided  in  the  act  that 
former  members  of  the  fire  department  may  be  pensioned  in 
the  same  way  by  the  board  of  fire  commissioners. 

An  earlier  act,  passed  in  1880,  chapter  107,  provides  pen- 
sions for  widows  and  orphan  children  of  firemen  killed  by 
injuries  received  in  the  discharge  of  duty.  The  amount  of 
such  pension  is  limited  to  $300  yearly.  The  same  act  further 
provides  for  the  custody  of  the  firemen's  relief  funds.  The 
mayor  and  the  board  of  fire  commissioners  are  constituted  a 
body  corporate  for  the  purpose  of  receiving  and  holding  any 
gifts  for  the  benefit  of  members  of  the  fire  department  or  their 
families  requiring  assistance.  These  provisions  were  ex- 
tended in  1881,  chapter  22,  to  apply  to  members  of  the  Boston 
protective  department. 

An  act  of  1898,  chapter  246,  authorized  the  city  to  spend 
a  sum  not  exceeding  $3,000  annually  for  the  relief  of  dis- 
abled firemen,  in  addition  to  the  sums  paid  for  pensions. 

It  should  be  noted  that  the  administration  of  the  pension 
system  is  now  under  the  charge  of  a  single  commissioner, 
substituted  in  1895  for  the  board  of  fire  commissioners.^ 

An  act  of  1893,  chapter  401,  provides  that  when  any  fire- 

"  Acts  of  1887,  chapter  178. 
«  Acts  of  1906,  chapter  291. 
»  .\ct3  of  1895,  Chapter  449. 


278  OLD   AGE   PENSIONS.  [Jan. 

man  belonging  to  the  regular  force  of  any  city  or  town  of  the 
Commonwealth,  or  any  person  in  the  active  service  of  the 
protective  department,  is  killed,  or  dies  within  sixty  days  from 
injuries  received  in  the  discharge  of  duty,  the  sum  of  $1,000 
shall  be  paid  out  of  the  treasury  of  the  Commonwealth  for  the 
use  of  the  widow,  minor  children  or  surviving  dependents  of 
the  deceased. 

An  act  of  1904,  chapter  233,  provides  pensions  for  em- 
ployees of  the  Boston  protective  department.  The  board  of 
directors  of  the  department  may  retire  on  pension  any 
employee  permanently  incapacitated  through  injury  in  the 
service,  or  any  employee  65  years  of  age  who  has  served  for 
twenty-five  years.  In  case  of  total  incapacity,  the  pension  is 
two-thirds  of  the  last  compensation ;  otherwise,  one-half. 

Teachers.  —  In  1900  a  public  school  teachers'  retirement 
fund  was  established  in  Boston  by  chapter  237  of  the  Acts  of 
that  year.  The  fund  is  composed  of  $3  withheld  from  the 
teachers'  salaries  each  alternate  month.  It  is  administered 
by  a  board  of  trustees,  consisting  of  the  superintendent  of 
schools,  three  male  and  three  female  teachers,  elected  by  the 
teachers,  and  three  members  of  the  school  committee,  elected 
by  the  latter.  Eetirement  is  permitted  to  teachers  who  have 
served  for  thirty  years,  ten  in  public  schools  of  Boston,  and 
have  contributed  $540  to  the  fund.  Teachers  may  also  be 
retired  for  incapacity  after  ten  years  of  service.  The  amount 
of  the  annual  allowance  is  determined  by  the  trustees,  but  all 
allowances  must  be  uniform.  Assessments  are  compulsory 
upon  all  teachers  entering  the  service  after  the  passage  of  the 
act,  and  upon  other  teachers  who  may  have  elected  to  come 
under  its  provisions.  Teachers  who  leave  the  service  after 
paying  assessments  for  ten  years  may  withdraw  one-half  of 
their  contributions. 

In  1908  a  pension  system  for  teachers  in  the  public  day 
schools  in  Boston  was  established  by  chapter  589.  The  act 
provides  that  the  school  committee  of  Boston  shall  immedi- 
ately establish  a  permanent  school  pension  fund.  The  care 
and  investment  of  the  fund  are  vested  in  a  board  of  three 
trustees,  one  to  be  chairman  of  the  board  of  commissioners  of 
the  sinking  funds  of  the  city,  and  another  to  be  chosen  by  the 


1910.]  HOUSE  —  No.  1400.  279 

school  committee,  and  a  third  by  the  board  of  trustees  of  the 
teachers'  retirement  fund  of  Boston.  The  trustees  are  to 
serve  without  compensation.  The  trustees  are  also  to  invest 
the  funds  in  such  securities  as  Massachusetts  savings  banks  are 
permitted  to  hold,  excepting  personal  securities.  An  appro- 
priation of  5  cents  from  each  $1,000  of  the  valuation  of  the 
city  is  authorized  to  provide  for  the  expenses  of  the  act.  The 
school  committee  may  retire  on  a  pension  any  teacher  who  i& 
incapacitated  for  efficient  service.  If  the  person  so  retired 
has  reached  the  age  of  65  years,  or  has  been  in  the  service  for 
thirty  years,  twenty  of  which  have  been  in  the  public  day 
schools  of  Boston,  the  amount  of  the  pension  is  $180.  In  case 
of  persons  of  lower  age  and  shorter  service  the  amount  of  the 
pension  is  proportionately  less. 

In  1909  an  amendment  to  the  preceding  act  was  passed,, 
chapter  537.  This  act  provides  that  teachers  who  were  an- 
nuitants of  the  teachers'  retirement  fund  association  when  the 
pension  law  took  effect,  and  all  teachers  who  had  retired 
before  that  date  and  had  taught  in  public  schools  for  an  aggre- 
gate period  of  thirty  years,  twenty  in  the  public  schools  of 
Boston,  shall  be  paid  annual  pensions  at  the  rates  and  from 
the  fund  established  by  the  previous  act.  It  is  provided, 
however,  that  only  40  of  such  persons  shall  receive  pensions 
during  the  first  year  after  the  act  takes  effect,  and  40  more  in 
each  succeeding  year,  according  to  length  of  service,  until  all 
those  eligible  under  the  law  have  been  pensioned.  This 
measure  was  accepted  by  the  school  committee  of  Boston^ 
under  a  provision  of  the  law  referring  it  to  that  body  for  final 
adoption. 

3.     Pension  Systems  in  Foreign  Cities. 

It  is  the  general  practice  of  the  British  and  European  cities 
to  pension  superannuated  employees.  There  is  a  wide  variety 
of  detail  in  the  provisions  of  these  pension  systems.  Infor- 
mation concerning  the  pension  provisions  in  23  leading  cities 
of  Great  Britain  and  the  European  continent  has  been  col- 
lected by  this  commission.  It  will  be  sufficient  for  the  pur- 
poses of  general  description,  first,  to  exhibit  the  different 
schemes  in  tabular  outline,  and  then  to  describe  somewhat  in 
detail  typical  schemes  in  different  cities. 


280 


OLD   AGE   PENSIONS. 


[Jan. 


Z 
O 

o 

K 
K 

C 
■Z 


OS 

O 


o 

o 

*— t 

.a 


w 
Z 

o 


o 
z 

o 

z 
a 


Retirement  for 
Incapacity,  regard- 
less of  Age. 

Yes;   amount  graduated 
according  to  length  of 
service. 

Yes;    after  ten  years  of 
service,   or  earlier   for 
disability    incurred    in 
service. 

i 

Contributions 

by  Employees  to 

Pension  Funds. 

3  per  cent,  regularly; 
5  per  cent,  for  first 
year,    if  salary   ex- 
ceeds 1,000  francs; 
first     month's     in- 
crease   in    case  of 
salary  raise. 

d 
o 

3 

£d 

t-co 

d-i 
o  ^ 

°.s 

O  w 

z; 

O 

d 

u 
0. 

CO 

d 

.0 

a 

0) 

Ph 

O 

3 
O 

a 

Is 

01 

h 

a 
O 

Pension  under  Prussian  law: 
fifteen-sixtieths    of    annual 
wages,    after    ten   years  of 
service,  and  one-sixtieth  for 
each  additional  year  up  to 
maximum      of      forty-five- 
sixtieths  after  forty  years  of 
service.     Pension    under 
city     ordinance:       twenty- 
sixtieths    of    annual  wages 
for    ten    years    of    service, 
and  one-sixtieth  additional 
yearly     for     thirty     years, 
after   which    one-one    hun- 
dred and  twentieth  yearly 
till    pension     amounts     to 
forty-five-sixtieths    of    an- 
nual wages. 

One-sixtieth  of  average  salary 
for  each  year  of  service,  till 
pension    amounts    to    one- 
half  of  whole  salary. 

Other  Conditions 

of  Eligibility  for  Age 

Pension. 

Twenty-five  years  of 
active   service   and 
cou  t  ribution  to 
fund;    thirty  years 
of  sedentary    s  e  r  - 
vice  and   contribu- 
tion to  fund. 

o 

'> 

u 
V 

m 

o 

a; 
>. 

S 

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CD 

tn 
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c3 

>> 

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d  <u 
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^ 

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E  OS 

^  0 

k 

a 

B 
<u 

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d 

'3 

O  m 

< 

All   officials   by    Prussian 
law;     other    employees 
by  city  ordinance. 

o 

"E 
S 

m 

d 

.3 
*S 

se 

< 

d 

d 
< 

n 

E 

c3 

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bO 
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I 


1910.] 


HOUSE  — No.  1400. 


281 


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282 


OLD   AGE   PENSIONS. 


[Jan. 


'-I3 
d 
o 

O 


Eh 

o 
O 

o 

O 


« 

CQ 

H 

-<; 

O 

o 

05 

H 

H 

Q 

o 

Q 

<; 


03 

o 

I— ( 

o 
o 

M 
CO 

'Z 
Ph 


Retirement  for 
Incapacity,  regard- 
less of  Age. 

Yes;     for   disability    in- 
curred in  service.  Reg- 
ular      pension       after 
forty  years  of  service, 
regardless  of  age. 

Mm 

0 

S 

C3 

a) 
>. 

d 

03-5: 

...  tH 

m  0) 
a>  n 

Yes;    after  ten  years  of 
service. 

Yes;  after  eight  years  of 
service. 

Contributions 

by  Employees  to 

Pension  Funds. 

a; 
d 
o 

1? 

cj 

1 

d 
o> 

0) 

f-t 

0) 

a 

CO 

.  03 

§•3 
aj  H 

CO 

Joint      contributions 
by  city  and  employ- 
ees 

0) 

d 
0 

d 
2 

"m 
d 

p^ 

o 
d 

3 
O 

a 
< 

33  J  per  cent,  of  salary  to  80 
per  cent,  of  salary,  accord- 
ing to  length  of  service. 

Full      pension      twenty-five- 
fiftieths  of  salary,  plus  two- 
fiftieths   for   each   year   of 
service  over  twenty-five. 

One-sixtieth  of  average  salary 
for    each   year  till  pension 
amounts  to  forty-sixtieths 
of  salary. 

^   . 

f>- 

>    h 

03  ja 
.^-^ 

H 

0  d 

H 

a> 
d 
0 

.p 

§£> 

d-^ 

a  03 

03  m 
.p 

as 

a^ 

other  Conditions 

of  Eligibility  for  Age 

Pension. 

Ten  years  of  service 
in  general;   only  six 
years    for    council- 
lors. 

Twenty-five  years  of 
service  for  full  pen- 
sion;    partial   pen- 
sions    for     shorter 
service. 

Forty  years  of  service 
for     retirement     at 
60;     ten    years    of 
service    for    retire- 
ment on  account  of 
old  age  at  65,  or  on 
account  of  ill  health. 

03 

M-, 
0 

2 

d 

.t  aj 
X  m 

m 

M-t 
0 

2 

c3 

a; 
>, 

>. 

1.1 

&> 

il 

d  aj 

to 
to 

s 

§ 

8 

0 

S6 

a  03 

M  d 
*^  o 

03 

o 

i 

o 

o 
-d 

CO 

u 

3 
bl 

"S 

a 

-d 
d 

03 

t» 

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—.   0) 

< 

a 

il 
ga 

pL, 

1 

>i 

0 

"a 

a 

aj 

•0 

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03 

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1 

0. 

d 

03 

.1 
0 

°s 

H 

"5 

0. 

^ 

3 

d" 

1 

<0 

1 

1910.] 


HOUSE  — No.  1400. 


283 


i 

i 

Yes;    graduated  accord- 
ing  to   length   of  ser- 
vice. 

Yes;  after  ten  years  of 
service;         retirement 
pension  for  accident  at 
any  age. 

3  5  per  cent,  of  salary 
contributed   by  em- 
ployee;   li  per  cent, 
.added  liy  city,  mak- 
ing joint   contribu- 
tion 5  per  cent,  of 
salary. 

5  per  cent,  of  salary; 
also    first    month's 
salary  of  new  em- 
ployees,   and    first 
month's  increase  in 
case  of  salary  raise. 

§ 

H  per  cent,  to  3i  per 
cent,    of  salary   or 
wages. 

5i  per  cent,  of  salary; 
entire    amount    of 
first     month's     in- 
crease   in    case    of 
salary  raise. 

Lump     payment     of    entire 
amount  standing  to  credit 
of    employee,    with    com- 
pound interest. 

One-lialf    of    average  salary 
during   last  four  years   for 
minimum  period  of  service 
rc<|uin!d,  and  5  per  cent,  of 
salary  in  addition  for  each 
further  year  of  service  till 
pension    amounts     to    two- 
thirds  of  salary. 

35  per  cent,  of  salary  if  retire- 
ment occurs  during  first  ten 
years  of  service;   2  per  cent. 
of    salary     for    each     year 
thereafter  to  twentieth  year 
of  service;    1   per  cent,  for 
each  year  after  twentieth, 
till  pension  amounts  to  75 
per  cent,  of  salary. 

Certain  percentage  of  salary, 
according  to  length  of  ser- 
vice, from  30  per  cent,   to 
entire    salary    after    forty 
years  of  service. 

One-sixtieth  of  average  salary 
or  wages  during  last  three 
years  of  service. 

1 
1 

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Thirty  years  of  ser- 
vice    in    general; 
twenty-five      years 
for     outdoor     em- 
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OLD   AGE   PENSIONS. 


[Jan. 


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1910.]  HOUSE  — No.  1400.  285 

(a)    Liverpool. 

The  pension  system  of  Liverpool  was  established  by  an 
act  of  1882.  Broadly  speaking,  the  system  applies  to  all 
classes  of  municipal  employees.  The  retirement  age  is  60 
years.  A  period  of  service  of  twenty-five  years  is  also  re- 
quired for  the  receipt  of  a  pension  of  full  amount.  For  em- 
ployees of  GO  years  of  age,  who  have  twenty-five  years  of 
service  to  their  credit,  a  pension  of  twenty-five-fiftieths  of 
the  salary  or  wages  is  granted,  with  an  additional  two-fiftieths 
for  each  completed  year  of  service  beyond  the  twenty-fifth 
year.  Pensions  of  smaller  amount  are  granted,  however,  for 
employees  who  have  served  fifteen  years,  or  even  less.  In 
case  of  employees  60  years  of  age,  with  fifteen  years  of 
service  to  their  credit,  the  amount  of  the  pension  is  fifteen- 
fiftieths  of  the  salary  or  wages,  with  an  additional  one-fif- 
tieth for  each  completed  year  of  service  beyond  the  fifteenth. 
Moreover,  special  provision  is  made  for  the  retirement  of  em- 
ployees 60  years  of  age,  who  have  served  less  than  fifteen 
years,  and  are  incapacitated  for  further  service  through  ill- 
ness or  accident  not  brought  about  by  their  own  misconduct ; 
in  such  case,  the  amount  of  the  pension  is  determined  by 
the  corporation. 

The  fund  for  the  payment  of  the  pensions  is  provided  by 
an  assessment  of  3  per  cent,  upon  the  salaries  and  wages  of 
the  employees. 

In  case  an  employee  is  required  by  the  corporation  to  re- 
tire from  the  service,  he  may,  if  he  requests  it,  receive  the 
amount  standing  to  his  credit  in  the  superannuation  fund, 
instead  of  the  amount  of  pension  provided  for  his  case.  Also, 
in  case  an  employee  becomes  entitled  to  superannuation  by 
reason  of  long  service,  or  ill-health,  or  old  age,  he  may,  at 
his  request,  receive  the  amount  standing  to  his  credit  in  the 
superannuation  fund,  instead  of  taking  the  pension.  In  case 
the  employee  retired  on  pension  dies  before  the  total  amount 
of  his  allowance  equals  75  per  cent,  of  the  sum  that  stood  to 
his  credit  at  the  date  of  his  retirement,  the  corporation  may 
pay  the  difference  to  the  family  or  legal  representatives  of 
the  employee  in  question. 


286  OLD   AGE   PENSIONS.  [Jan. 

In  addition  to  the  3  per  cent,  of  salary  or  wages  which 
officials  are  required  to  contribute  to  the  superannuation  fund, 
the  corporation  requires  that  they  shall  contribute  at  least 
2  per  cent,  of  their  salary  or  wages  toward  the  provision  of 
life  insurance  for  the  benefit  of  those  dependent  upon  them. 

In  closing  his  report  upon  municipal  pensions  in  Liver- 
pool, prepared  for  this  commission,  in  May,  1909,  United 
States  Consul  John  L.  Griffith  of  that  city  comments  as  fol- 
lows upon  the  attitude  of  public  opinion  toward  pensions :  — 

A  new  act  of  superannuation  is  in  contemplation,  as  it  is  thought 
by  many  that  the  present  act  is  somewhat  too  favorable  to  the  em- 
ployees. Practically  all  the  employees  of  the  city,  from  the  highest 
to  the  lowest,  and  covering  all  classes  and  grades  of  work  and  char- 
acter of  service,  are  entitled  to  a  pension  under  the  conditions  set 
forth  in  the  superannuation  act.  The  system,  as  already  stated,  has 
been  in  operation  in  Liverpool  for  a  little  over  a  quarter  of  a  century, 
and  meets,  as  far  as  can  be  ascertained,  with  general  approbation. 
So  i^ronounced,  indeed,  is  the  feeling  in  favor  of  the  granting  of 
pensions,  that  it  would  be  impossible,  in  my  judgment,  to  abrogate  it. 

The  system  of  pensions  applies  in  England  not  only  to  the  em- 
ployees of  civic  corporations,  but  to  public  officials  generally.  The 
collector  of  customs  in  Liverj^ool,  who  retired  on  a  pension  about  a 
year  ago,  stated  that  during  the  eight  years  he  was  collector  of  the 
port  of  Liverpool,  with  hundreds  of  emjiloyees  under  him,  and  with 
the  receipts  of  his  office  aggregating  annually  about  £6,000,000 
($29,160,000),  there  had  not  been  a  single  instance  of  defalcation  or 
embezzlement.  He  attributed  this  to  the  fact  that,  while  the  com- 
pensation paid  was  in  most  instances  not  large,  yet  the  men  were 
steadied  by  the  certainty  of  their  tenure  and  the  knowledge  that,  if 
they  were  faithful  in  their  work,  provision  would  be  made  for  their 
old  age.  It  is  customary  in  England  for  the  banks,  insurance  com- 
panies and  many  of  the  large  industrial  and  ti'ading  companies  to 
pension  faithful  employees  who  retire  after  a  long  period  of  service. 
This  extends  even  to  the  case  of  domestic  servants.  It  is  very  rare, 
I  imagine,  in  England,  for  domestic  servants  in  the  employ  of  men  of 
wealth  not  to  receive  a  joension  in  their  old  age. 

(b)    London. 

The  general  municipal  pension  scheme  of  the  London 
county  council  now  in  operation  dates  from  1906.  The  pres- 
ent scheme  is  an  extension  of  a  pension  system  adopted  by 


1910.]  HOUSE  — No.  1400.  287 

the  council  in  1889.  The  earlier  plan  provided  for  the  pay- 
ment of  a  lump  sum  to  retiring  employees,  made  up  of  joint 
contributions  by  the  latter  during  the  period  of  employment, 
and  by  the  council,  with  interest.  The  employees'  contribu- 
tion was  2^  per  cent,  of  the  wages  and  that  of  the  council 
an  equal  amount.  This  plan  was  entirely  inadequate  to 
provide  reasonably  for  retired  servants  of  the  municipality. 
Concerning  its  inadequacy  and  the  need  of  a  more  liberal 
pension  policy,  the  general  purposes  committee  of  the  council, 
which  prepared  the  amended  scheme  now  in  force,  stated 
in  its  report :  — 

It  is  represented  to  us,  and  this  view  has  been  supported  by  two 
memoranda  from  the  establishment  committee,  that  the  council's 
superannuation  and  provident  fund  does  not  serve  to  attract  men 
to  the  service  or  to  retain  them,  and  that  a  preference  is  shown  by 
candidates  for  the  government  service  over  the  council's  service,  on 
account  of  the  prospect  of  obtaining  a  pension  from  the  former.  The 
establishment  committee  also  informed  us  that  in  some  cases  officials 
had  resigned  the  council's  service  in  order  to  enter  government  ser- 
vice, an  important  factor  being  the  prospect  of  a  pension.  As  the 
establishment  committee  point  out,  dislocation  in  the  work  inevitably 
occurs  when  officials  leave  the  service  after  having  obtained  experience 
in  the  work  of  the  council,  and  we  think  that  an  inadequate  superan- 
nuation scheme  will  have  serious  results  on  the  future  of  the  service, 
if  not  remedied  at  an  early  date.  The  stability  of  the  council's 
service  will  be  imperilled  and  the  work  impaired,  if,  on  the  one 
hand,  officials  do  not  continue  in  the  service,  and,  on  the  other  hand, 
capable  young  men  are  not  attracted  to  it  as  offering  an  adequate 
careei*.  We  feel  sure  that  the  council  will  desire  to  extend  to  its 
officers,  engaged  as  they  are  in  the  service  of  the  most  important 
municipal  authority  in  the  world,  sympathetic  consideration  in  this 
matter  of  superannuation. 

Under  the  present  system,  officials  or  servants  employed 
in  a  permanent  capacity,  —  except  those  employed  in  certain 
services,  such  as  teachers  and  firemen,  for  whom  special  pen- 
sion schemes  are  in  force,  —  contribute  a  percentage  of  their 
salary  or  wages  to  a  superannuation  fund.  The  scale  of  con- 
tribution is  as  follows :  First,  for  salaried  officers  entering  the 
service  under  the  age  of  25,  3  per  cent. ;  from  the  age  25  to 


288  OLD   AGE   PENSIONS.  [Jan. 

the  age  35,  314  per  cent. ;  from  the  age  35  to  the  age  40, 
4  per  cent. ;  at  age  40  and  upwards,  5  per  cent.  Second,  for 
employees  on  weekly  wages,  2d.  for  each  Ss.  or  part  thereof. 
The  council  contributes  to  the  fund  3  per  cent,  on  the  salaries, 
and  2  per  cent,  for  each  5s.  or  part  thereof  of  wages,  and  also 
guarantees  interest  at  the  rate  of  3^/2  psr  cent,  on  the  ac- 
cumulated fund. 

Pensions  are  granted  to,  (a)  officers  and  employees  who 
have  completed  forty  years  of  service,  and  have  reached  the 
age  of  60;  (&)  officers  who  have  served  ten  years,  and  are 
retired  for  old  age  at  65  years,  or  for  ill  health.  The  pen- 
sion amounts  to  one-sixtieth  of  the  officer's  average  pay  and 
emoluments  throughout  his  period  of  service,  for  each  year 
of  service,  up  to  a  maximum  pension  of  forty-sixtieths.  It 
is  provided,  further,  that  no  officer  retiring  for  ill  health, 
after  ten  years  of  service,  shall  receive  less  than  one-third  of 
his  average  pay  and  emoluments.  In  case  of  retirement  for 
ill  health  before  the  completion  of  ten  years  of  service,  the 
employee's  own  contributions,  with  interest  at  3  per  cent., 
are  returned  to  him.  In  the  event  of  the  death  of  an  em- 
ployee while  in  service,  his  own  contributions,  with  interest 
at  3  per  cent.,  are  paid  to  his  family  or  legal  representatives. 
If  an  employee  dies  after  retirement,  the  difference,  if  any, 
between  his  own  contributions,  —  with  3  per  cent,  interest 
to  date  of  retirement,  —  and  the  payments  already  made,  in 
the  form  of  pension  or  other  allowance,  is  payable  to  his 
family  or  legal  representatives.  When  an  employee  retires 
voluntarily,  or  is  honorably  dismissed,  his  contributions  are 
refunded.  Dismissal  or  retirement,  or  resignation  to  escape 
dismissal  for  fraud  or  dishonesty,  or  misconduct  involving 
pecuniary  loss  to  the  council,  entails  forfeiture  of  claim  to 
a  pension.  The  council  has  power  to  make  additional  al- 
lowances out  of  the  county  fund  to  meet  special  cases. 

(c)     Manchester. 
This  city  has  no  pension  system,  strictly  speaking,  except 
for  members  of  the  police  force,  which  is  administered  under 
the   provisions    of    an    act    of   Parliament,    1890,    entitled: 


1910.]  HOUSE  — No.  1400.  '  289 

"  Police  act,  applicable  to  the  entire  United  Kingdom."  The 
Manchester  corporation  has,  however,  established  a  thrift 
fund  for  municipal  officials,  which  is  practically  a  pension 
system  on  a  contributory  basis.  This  fund  was  established 
in  August,  1802. 

The  fund  provides  for  the  payment  of  a  certain  sum  of 
money  to  officials  who  have  contributed  to  it,  upon  attaining 
the  age  of  65  years,  or  at  an  earlier  age  if  incapacitated 
mentally  or  phvsicallv  for  further  service.  The  obligation 
to  contribute  applies  to  all  permanent  employees  receiving 
not  less  than  $7.29  per  week.  The  amount  of  the  contribu- 
tion is  3%  per  cent,  of  the  salary  or  wages,  to  which  the  cor- 
poration adds  a  supplementary  amount  of  11/4  P^i'  cent., 
making  the  joint  contribution  to  the  fund  5  per  cent,  of 
salary  or  wages.  A  separate  account  is  kept  for  each  con- 
tributor, and  the  contributions  are  credited  to  this  account 
half-yearly,  and  accumulate  with  compound  interest.  The 
beneficiaries  are  not  allowed  to  withdraw,  alienate  or  charge 
the  amount  standing  to  their  credit. 

The  amount  payable  upon  retirement  is  a  lump  sum,  not 
an  annuity,  equivalent  to  the  entire  amount  standing  to  the 
credit  of  the  employee,  including  the  contributions  by  the 
corporation,  with  interest  compounded  semi-annually  at  4 
per  cent.  In  case  of  the  death  of  a  contributor  in  the  service 
of  the  corporation,  this  amount  is  payable  to  his  representa- 
tives, or,  in  the  absence  of  any  will,  to  the  person  whom  the 
corporation  regards  as  entitled  to  receive  the  amount. 

A  contributor  who  leaves  the  municipal  service  for  any 
cause  other  than  fraud,  di^^honesty  or  misconduct,  before  he 
reaches  the  age  of  65,  or  becomes  incapacitated,  is  entitled 
to  receive  the  amount  of  his  contributions,  with  4  per  cent, 
compound  interest,  but  not  of  the  contributions  by  the  cor- 
poration. In  ease  of  long  illness,  an  advance  may  be  made 
to  the  contributor  equal  to  one-fourth  of  his  cr.ntributious, 
with  interest. 

The  administration  of  the  fund  is  under  the  control  of 
the  corporation,  in  concurrence  with  a  consultative  committee 
of  five  contributoi's  elected  annuallv.     United  States  Consul 


290  ■  OLD   AGE   PENSIONS.  [Jan. 

Church  Howe  sums  up   the   advantages   of  this   scheme   as 
follows :  — 

(1)  The  assurance  of  some  provision  for  illness,  incapacity,  old 
age  or  death;  (2)  the  avoidance  of  the  necessity  for  making  costly 
and  uncertain  provision  for  old  age,  which  too  often  fails  when  most 
wanted;  (3)  the  removal  of  anxiety  as  to  the  security  of  savings,  and 
the  prevention  of  injudicious  investments;  (4)  the  supplemental 
contribution  of  6  cents  in  the  pound,  and  the  guarantee  of 
4  per  cent,  interest;  (5)  non-forfeiture  of  savings  in  case  of  leaving 
the  corporation  service  voluntarily;  (6)  the  preservation  of  inde- 
pendence. 

(d)     Edinburgh. 

The  municipal  pension  system  of  Edinburgh  was  one  of 
the  last  to  go  into  force,  having  been  adopted  in  March,  1906. 
A  unique  feature  of  this  system  is  the  provision  for  com- 
pulsory retirement  of  all  municipal  employees  at  the  age  of 
65. 

The  object  of  a  municipal  pension  scheme  was  well  stated 
in  the  report  of  the  committee  which  drew  up  the  Edinburgh 
plan  for  the  city  council.     The  report  reads :  — 

It  would  be  a  mistake  to  suppose  that  a  superannuation  scheme  is 
solely  for  the  benefit  of  the  employees;  the  question  of  retirement, 
upon  which  superannuation  depends,  is  at  least  as  important  for  the 
corporation.  The  primary  object  of  such  a  scheme  is  to  secure  effi- 
cient service,  even  more  than  to  benefit  the  employees.  Very  often 
the  employee  desires  to  continue  in  the  service,  and  thus  draw  his 
full  salary  or  wage,  even  after  he  is  no  longer  able  to  give  fully 
efficient  service,  though  it  may  be  difficult  or  impossible  to  prove 
"  permanent  incapacity  for  w^ork."  ...  It  is  mainly  the  paramount 
importance  of  thus  maintaining  the  efficiency  of  the  public  service 
which  has  led  the  government  (in  connection  with  the  civil  service), 
the  English  poor  law  authorities,  the  j)olice  authorities  and  many 
corporations  and  other  public  bodies,  as  well  as  railway  companies, 
banks  and  insurance  offices,  to  establish  regular  schemes  for  the 
retirement  of  their  employees  on  superannuation.  If  such  bodies 
were  to  insist  ujDon  their  employees  leaving  the  service  at  a  specified 
age,  without  any  provision  for  a  retiring  allowance,  this  might  put 
them  at  a  disadvantage  in  competing  with  private  businesses, 
where  there  was  no  such  restriction,  for  the  services  of  competent 
men.  They  might  find  that  the  most  eligible  men  would  be  deterred 
from  entering  the  service,  or  that  their  best  officials  and  servants 


1010.]  HOUSE  — No.  1400.  291 

would  leave  them  for  outside  posts.  To  avoid  such  a  result  to  the 
detriment  of  the  service,  there  has  been  introduced  the  system  of 
superannuation,  under  which  the  employee  is  granted  an  allowance 
on  retirement.  Wh.ere,  as  in  the  case  of  the  civil  service  and  some 
others,  the  employees  do  not  contribute  anything  towards  the  super- 
annuation fund,  that  allowance  is  sometimes  spoken  of  as  "  deferred 
pay."  Even  on  economical  grounds,  it  may  be  better  for  a  public 
body  to  pay  such  retiring  allowances,  and  thereby  secure  efficiency, 
than  to  go  on  giving  full  pay  to  employees  who  are  no  longer  at 
their  best.  .  .  . 

"While  the  interest  of  the  corporation,  apart  from  the  employees, 
to  have  a  superannuation  scheme  on  proper  lines,  may  thus  be  clear, 
it  is  not  unreasonable  that  the  employees  should  also  contribute  to 
the  fund  from  which  they  are  to  derive  benefit.  The  scheme  being 
really  for  the  benefit  of  both  parties,  and  in  their  mutual  interest, 
they  should  both  contribute.  Accordingly,  it  is  on  the  lines  of  con- 
tributions being  paid  by  both  that  most  of  the  schemes  which  have 
been  established  by  corporations  are  framed. 

The  plan  provides  for  the  pensioning  of  all  officials  and 
servants  of  the  corporation  who  have  completed  ten  years  of 
service  and  have  become  incapacitated,  or  who  have  attained 
the  age  of  sixty  years.  Employees  who  have  attained  the  age 
of  65  years  are  obliged  to  retire  and  take  the  pension.  The 
amonnt  of  the  pension  for  an  employee  who  has  served  ten 
years  is  ten-sixtieths  of  the  average  salary  or  wages  during 
the  five  years  preceding  retirement;  for  each  additional  year 
beyond  ten.  one  sixtieth  of  the  salary  or  wages  is  paid,  nntil 
at  forty  years  of  service  the  maxinmiu  amonnt  of  forty 
sixtieths  of  the  salary  is  reached.  An  exception  is  made  here 
for  members  of  the  fire  department,  who,  after  twenty-fonr 
years  of  service,  receive  an  annual  addition  of  two-sixtieths, 
instead  of  one-sixtieth,  nntil  the  maximum  of  forty-sixtieths 
is  reached.  The  corporation  is,  furthermore,  empowered  to 
add  a  certain  number  of  years,  not  exceeding  ten,  as  a  basis 
for  calculating  the  pension,  in  case  of  employees  entering  the 
service  after  30  years  of  age. 

An  em]iloyee  who  is  dismissed  or  resigns,  or  otherwise 
ceases  to  hold  his  employment,  in  consequence  of  being  con- 
victed of  an  oifcnce  of  a  fraudulent  character  or  an  offence  for 
which  he  is  sentenced  to  imprisonment   for  six  months  or 


292  OLD   AGE   PENSIONS.  [Jan. 

more,  forfeits  all  claim  to  a  pension.  Employees  who  re- 
sign or  voluntarily  leave  their  employment  are  entitled  to  a 
rebate  equal  to  one-half  of  the  amount  of  their  contributions 
to  the  pension  fund,  without  interest.  Employees  who  are 
discharged  for  reasons  of  economy  are  entitled  to  a  rebate 
equal  to  the  full  amount  of  their  contributions,  without  in- 
terest. 

Employees  are  required  to  contribute  to  the  pension  fund 
21/2  per  cent,  annually  of  the  salary  or  wages.  The  pension 
allowance  is  not  assignable  or  arrestable  for  debts  or  other 
liabilities.  The  corporation  contributes  to  the  fund  annually 
an  amount  equal  to  the  sum  contributed  by  the  employees. 
The  corporation,  also,  is  required  to  make  good  any  deficit 
in  the  annual  budget  of  the  fund,  on  account  of  excess  of 
pension  claims  over  available  resources. 

(e)    Berlin. 

The  pension  system  of  Berlin,  in  its  present  form,  dates 
from  the  year  1890.  The  city  has  a  general  system  of  pen- 
sions for  municipal  employees,  and  special  provisions  for 
teachers  and  firemen.  The  general  pension  system  provides 
for  all  officials  and  employees  who  are  permanently  employed 
by  the  municipality.  Officials  are  pensioned  under  the  pro- 
visions of  a  general  Prussian  law  relating  to  the  employment 
and  pensioning  of  communal  officials.  Other  employees  are 
taken  care  of  by  city  ordinance.  The  pensions  given  under 
Prussian  law  are  permanent  and  irrevocable,  while  those 
given  under  the  city  ordinance  may  be  revoked  at  any  time, 
if  the  municipal  finances  are  in  such  a  state  that  this  action 
seems  expedient.  As  a  matter  of  fact,  a  city  pension  is  sel- 
dom withdrawn. 

Under  the  provisions  of  the  Prussian  pension  act,  munic- 
ipal officials  of  65  years  of  age  are  entitled  to  retire  on  pen- 
sion without  proving  disability.  Officials  of  this  age  are  also 
subject  to  compulsory  retirement,  by  order  of  the  municipal 
council,  whenever  they  are  regarded  as  disqualified  for  fur- 
ther service.  Officials  who  have  served  ten  years,  and  have 
become  permanently  disabled,  are  also  entitled  to  pension. 
In  case  of  disability  resulting  from  injury  incurred  in  the 


1910.]  HOUSE  — No.  1400.  293 

discharge  of  duty,  without  fault  of  the  official,  the  latter  is 
entitled  to  a  pension  before  having  served  ten  years.  An 
official  disabled  for  other  reasons,  before  having  served  ten 
years,  may  be  pensioned  by  special  order  of  the  municipal 
council.  The  amount  of  the  pension  after  ten  years  of  ser- 
vice is  fifteen-sixtieths  of  the  yearly  official  income,  with  an 
additional  one-sixtieth  for  each  year  of  service  after  ten 
until  the  pension  amounts  to  forty-five-sixtieths  of  the  income, 
which  is  the  maximum  pension.  Pensions  granted  by  special 
vote  of  the  council,  before  the  official  has  served  ten  years, 
may  not  exceed  one-fourth  of  the  income.  The  pension  for 
permanent  disability  incurred  in  service,  after  ten  years, 
may  not  be  less  than  one-fourth  of  the  income.  Pensions 
are  also  provided  for  widows  and  orphans  of  deceased  officials. 

Under  the  municipal  pension  ordinances,  the  conditions 
for  receipt  of  a  pension  are  ten  years  of  uninterrupted 
service  and  permanent  disability.  In  case  of  disability  in- 
curred in  the  service,  without  fault  of  the  employee,  a  pen- 
sion may  be  granted  before  ten  years.  The  amount  of  the 
pension,  which  is  known  as  Puhegeld,  is  twenty-sixtieths  of 
the  wages  for  ten  vears  of  service,  with  an  additional  one- 
sixtieth  for  each  year  beyond  ten,  until  the  thirtieth  year 
of  service,  and  one-one-hundred  and  twentieth  for  each  year 
thereafter  until  the  pension  amounts  to  forty-five-sixtieths, 
which  is  the  maximum.  The  pension  for  disability  prior 
to  ten  years  of  service  is  twenty-sixtieths  of  the  wages. 
Widows  and  orphans  are  pensioned  proportionately  to  the 
Puhegeld  to  which  the  deceased  employee  was  entitled.  Pro- 
vision is  also  made  for  the  payment  of  temporary  pensions 
to  employees  who  have  been  discharged  for  reasons  of  econ- 
omy, or  other  causes  not  affecting  their  efficiency,  to  be  paid 
during  the  time  in  which  they  remain  unemployed. 

United  States  Consul  A.  M.  Thackara  reports  that  the 
pension  system,  "  in  the  opinion  of  the  Berlin  city  authori- 
ties, works  satisfactorily." 

(f)     Hamburg. 
Hamburg  is,  strictly  speaking,  not  a  city,  but  a  State,  — 
the  free  and  hanseatic  State  of  Hamburg. 


294  OLD   AGE   PENSIONS.  [Jan. 

The  ijensiou  system  of  Hamburg  was  established  by  the 
pension  act  of  January  7,  1884.  The  system  applies  to  all 
officials  except  judges,  who  are  separately  provided  for.  An 
official  is  defined  as  every  person  occupying  a  permanent  posi- 
tion for  lifetime  in  the  municipal  service  of  the  State  of 
Hamburg. 

Retirement  pensions  are  granted  to  officials  who  have  been 
in  the  service  at  least  ten  years,  counting  from  the  twenty- 
fifth  year  of  their  age,  who  have  reached  their  thirtj'-fifth 
year,  and  who,  because  of  physical  or  mental  incapacity,  are 
permanently  unable  to  discharge  their  duties.  When  an  of- 
ficial begins  service  before  his  twenty-fifth  year,  the  term 
of  service  is  reckoned  as  beginning  with  that  year.  Retire- 
ment on  pension  is  voted  by  the  Senate  of  Hamburg,  with 
the  consent  of  the  chief  committee  of  the  House  of  Bur- 
gesses, upon  application  by  the  official  himself  or  the  depart- 
ment in  which  he  is  employed.  The  application  is  filed  with 
the  department  and  then  transmitted  to  the  Senate  with  a 
report. 

In  case  retirement  is  rendered  necessary  because  of  injury 
or  illness  contracted  in  the  service  of  the  State,  the  official  in 
question  may  be  retired  with  pension,  although  he  may  not 
have  served  ten  years,  or  may  not  have  reached  the  age  of 
35.  In  case  disability  resulting  in  retire'ment  follows  from 
other  causes,  and,  although  the  official  in  question  may  be- 
come disabled  before  ten  years  of  service,  or  before  the  age 
of  35,  he  may,  by  order  of  the  Senate,  with  approval  of  the 
Burgesses'  committee,  and  in  case  of  need,  be  granted  money 
for  temporary  support  or  maintenance  for  life. 

An  official  who  has  reached  the  age  of  65  may  be  retired 
without  proof  of  disability,  and  must  be  retired  if  he  so 
desire. 

An  official  discharged  because  of  misdemeanor  in  office 
loses  his  title  and  all  claim  to  salary  and  pension. 

The  amount  of  the  pension  is  40  per  cent,  of  the  official 
income.  If  the  salary  at  time  of  retirement  was  2,000  marks 
or  less,  the  pension  is  increased  2  per  cent,  for  every  year  of 
service  beyond  ten  years.  If  the  last  salary  was  more  than 
2,000  marks,  an  addition  of  1^2  per  cent,  is  allowed  for  each 


1910.]  HOUSE  — No.  1400.  295 

vear  of  service  beyond  ten  vears,  until  the  anionnt  of  the 
last  salary  is  reached.  If  the  pension  calculated  in  this  way, 
on  an  income  in  excess  of  2,000  marks,  would  be  less  than 
the  pension  to  which  the  applicant  would  be  entitled  if  his 
last  official  income  had  been  only  2,000  marks,  then  the  pen- 
sion is  increased  to  the  amount  that  would  have  been  due  on 
the  latter  basis.  An  official  pensioned  on  account  of  disabil- 
ity contracted  in  the  discharge  of  his  duties,  and  who  has 
served  ten  years,  must  always  be  pensioned  to  the  amount  of 
at  least  40  per  cent,  of  his  income ;  but  if  such  official  becomes 
disabled  before  his  thirtv-fifth  vear  of  life  and  tenth  vear  of 
service,  the  pension  may  in  no  case  exceed  40  per  cent,  of 
his  last  income. 

The  expense  of  the  pension  system  is  borne  entirely  by  the 
State,  no  contributions  being  required  from  officers. 

Mr.  Robert  P.  Skinner,  United  States  Consul  General  in 
Hamburg,  in  a  report  upon  the  pension  system  transmitted 
to  this  commission  offers  in  conclusion  the  following  inter- 
esting comment :  — 

The  city  of  Hamburg-  pays  its  pensions  out  of  its  own  resources. 
The  beneficiaries  of  this  system  liave  made  frequent  attempts  since 
1884  to  secure  an  amendment  to  existing-  legislation,  which  they  do 
not  regard  as  sufficiently  favorable.  There  are  no  discoverable 
differences  of  opinion  whatever  in  regard  to  the  wisdom  of  the  prin- 
ciple ui)on  whicli  the  granting  of  such  pensions  is  based.  The  State 
of  Hamburg-  is  a<lmirably  sei'ved  in  all  its  branches,  and  devotion  to 
duty  is  secured  by  careful  appointments  in  the  first  jjlace,  and 
disciplinary  regulations  thereafter.  These  conditions  being  secured, 
it  is  repugnant  to  the  sense  of  justice  of  the  public  at  large,  and 
deemed  contrary  to  the  interests  of  the  State,  to  accept  the  labors 
of  government  oHicials,  who  are  j)revented  from  engaging  in  jirofit- 
able  business  ventures  and  whose  annual  incomes  are  not  excessive, 
without  guaranteeing  such  officers  against  want  when  they  are  no 
longer  physically  cajtable  of  continuing  in  such  service. 

(g)     Nuremberg. 

This  city  has  a  general  system  of  municipal  pensions,  which 

ap]dies  to  practically  all  employees  of  the  city.     The  system 

is  administered  through  two  funds,  —  the  city  pension  fund 

and  the  employees'  maintenance  fund.     All   persons  in   the 


296  OLD   AGE   PENSIONS.  [Jan. 

employ  of  the  city  must  contribute  to  one  or  the  other  of 
these  funds  and  may  share  in  the  benefits. 

The  city  pension  fund  includes  the  mayor,  the  city  coun- 
cillors, engineers,  clerks,  teachers,  policemen  and  so  on.  The 
employees'  maintenance  fund  includes  firemen,  street-car  em- 
ployees, employees  of  the  gas,  electric  light  and  water  works, 
janitors,  street  laborers  and  other  workers. 

The  amount  of  the  j)ension  under  the  city  pension  fund 
is  determined  upon  a  percentage  of  the  official  salary.  The 
pension  paid  to  the  mayor  or  to  a  city  councillor,  in  case 
of  disability  occurring  during  the  first  year  of  service, 
amounts  to  seven-tenths  of  the  salary;  in  case  of  disability 
occurring  during  the  second  year,  eight-tenths;  from  the 
third  to  the  thirty-ninth,  nine-tenths;  from  the  fortieth  year 
on,  the  full  amount  of  the  salary.  Officials  and  employees 
ranking  below  the  mayor  and  the  councillors  receive,  if  pen- 
sioned during  the  first  five  years  of  service,  five-tenths  of 
the  salary ;  if  during  the  period  from  the  sixth  to  the  thirty- 
ninth  year,  nine-tenths ;  from  the  fortieth  year  on,  the  full 
amount  of  the  salary.  Widows  receive  from  two-tenths  to 
four-tenths  of  the  salary,  according  to  the  length  of  service 
of  the  husband,  and  an  additional  allowance  for  each  child 
under  20  years  of  one-fifth  of  the  amount  of  pension. 

The  city  pension  fund  is  maintained  by  assessments  upon 
the  salaries  of  the  prospective  beneficiaries,  including  a  lump 
payment  of  10  per  cent,  of  the  annual  salary  when  the  em- 
ployee enters  the  service,  and  an  annual  assessment  ranging 
from  214  per  cent,  to  3l/o  per  cent.  Persons  entering  the 
municipal  service  at  35  years  of  age  or  under  pay  the  lower 
percentage,  while  those  coming  in  later  pay  the  higher  rate. 
An  exception  is  made  in  the  case  of  the  mayor  and  the  coun- 
cillors, who  are  assessed  only  1  per  cent,  on  the  salary. 

This  system  has  been  in  operation  since  1875.  United 
States  Consul  George  N".  Ifft  states :  — 

It  is  not  only  generally  satisfactory,  but  is  highly  praised.  A  bill 
for  an  ordinance  is  now  pending,  abolishing  all  assessments  upon  the 
prospective  beneficiaries  for  the  maintenance  of  the  pension  fund, 
and  placing  the  entire  burden  on  the  city.    This  is  in  line  Avith  recent 


1910.]  HOUSE  — No.  1400.  297 

enactments  of  the  Bavai'ian  govei'nment  in  the  matter  of  pensions  for 
State  employees,  and  it  will  undoubtedly  be  adopted  in  due  time. 

The  employees'  maintenance  fund  was  established  in  1901, 
to  provide  for  municipal  employees  who  were  not  included 
in  the  city  pension  fund.  In  order  to  participate  in  the  bene- 
fits of  this  fund,  a  person  must  enter  the  service  of  the  city 
between  the  ages  of  21  and  40  years,  and  must  have  paid 
assessments  for  at  least  five  years  prior  to  application  for  a 
pension,  and  must  be  totally  disabled.  The  amount  of  the 
pension  after  five  years  of  service  is  30  per  cent,  of  the  annual 
wages,  and  1  per  cent,  additional  for  each  year  thereafter, 
till  the  pension  amounts  to  60  per  cent,  of  the  wages.  Widows 
receive  from  one-third  to  one-half  of  the  amount  to  which 
the  husband  would  have  been  entitled,  and  an  additional 
allowance  for  each  child  under  15  years  of  age  of  one-third 
of  the  amount  of  the  widow's  pension. 

The  assessments  for  this  fund  are  graduated  as  follows: 
21  to  25  years  of  age,  IV2  P^i"  cent,  of  the  wages;  25  to  30 
years,  2  per  cent. ;  30  to  35  years,  21/^  per  cent. ;  35  to  40 
years,  3  per  cent. ;  40  years  on,  3I/2  per  cent.  An  employee 
discharged  for  reasons  other  than  negligence,  laziness  and  the 
like,  receives  three-fourths  of  the  amount  paid  in  by  him. 
An  employee  who  leaves  the  service  voluntarily  gets  no  rebate. 

(h)     Marseilles. 
The  pension  system  of  this  city  provides  for  all  municipal 
employees,   including  two   classes,    as   distinguished    in   the 
pension   act,  —  indoor  or  clerical  workers,   and   outdoor   or 
manual  laborers.     Employees  of  the  former  class  are  pen- 
sionable at  the  age  of  60,  after  thirty  years  of  service;  those 
of  the  latter  class  at  the  age  of  55,  after  twenty-five  years 
of  service,  which  must  include  fifteen  years  of  outdoor  em- 
ployment.    The  system  also  provides  for  the  pensioning  of 
employees  for  incapacity,  regardless  of  age.     Under  the  pro- 
visions for  this  class  of  pensions,  the  following  are  pension- 
able: first,  employees  who  have  been  incapacitated  through 
injuries  received  in  the  performance  of  heroic  acts  for  the  pub- 
lic 2:ood  ;  second,  employees  disabled  through  injuries  received 


298  OLD   AGE    PENSIONS.  [Jan. 

in  the  discharge  of  their  duty;  third,  employees  of  45  years 
of  age  and  fifteen  years  of  service  on  the  clerical  staff,  those 
of  forty  years  of  age  and  ten  years  of  service  on  the  out- 
door staff  who  are  aiflicted  with  a  serious  infirmity  or  disease 
evidently  caused  hy  the  peculiar  nature  of  their  work,  and 
employees  M^ho  have  been  discharged  for  reasons  of  economy. 

The  amount  of  pension  is  calculated  on  the  basis  of  the 
average  annual  salary.  The  age  pension  for  clerical  workers, 
after  thirty  years  of  service,  and  for  outdoor  workers  after 
twenty-five  years  of  service,  shall  not  exceed  one-half  this 
salary  basis ;  then  for  each  additional  year  the  pension  is 
increased  by  5  per  cent,  of  the  half  salary.  In  no  case  shall 
the  pension  exceed  two-thirds  of  the  salary  basis.  The  dis- 
ability pension  for  emj)loyees  of  the  first  group,  as  given 
above,  is  one-half  of  the  last  salary;  for  those  of  the  second 
group,  the  amount  of  the  pension  is  calculated  upon  the  basis 
of  the  last  salary  and  the  nature  of  the  work ;  for  those  of  the 
third  group,  the  pension  is  similar  to  that  of  the  second.  In 
each  case  one-sixtieth  is  added  to  the  pension  for  each  year 
of  service  for  clerical  workers,  one-fiftieth  for  outdoor 
workers. 

The  pension  fund  is  maintained  by  salary  assessments 
and  by  various  other  contributions,  including  the  following: 
first,  5  per  cent,  of  the  salary ;  second,  the  first  month's 
salary  of  each  new  employee ;  third,  the  first  month's  increase 
of  salary  in  case  of  a  salary  raise ;  fourth,  a  part  of  the  fines 
imposed  by  the  municipality ;  fifth,  the  revenue  from  French 
bonds  held  by  the  municipality;  sixth,  subventions  granted 
by  the  communal  budget. 

(i)  Paris. 
The  beginning  of  the  municipal  pension  system  of  Paris 
dates  back  to  1813.  The  system  has  been  modified  by  various 
enactments,  the  last  of  which  was  passed  in  1897.  In  its 
present  form  the  system  is  administered  under  a  municipal 
ordinance  of  1882.  All  employees  of  the  city  are  eligible  to 
l"»ensions  under  the  conditions  prescribed.  The  right  to  a 
pension  is  granted  to :  (a)  employees  who  have  been  in  the  ser- 
vice of  the  city  thirty  years,  and  have  reached  the  age  of  60 ; 


1910.]  HOUSE  — No.  1400.  299 

(h)  employees  who  have  served  ten  years,  and  are  prevented 
by  inability  from  continuing  in  the  service;  (c)  employees 
who  are  injured  in  the  performance  of  duty,  irrespective  of 
age  or  length  of  service. 

The  amount  of  the  pension  is  determined  by  the  length 
of  service  and  the  rate  of  wages  of  the  employee.  The  calcu- 
lation is  based  upon  the  average  earnings  of  the  last  three 
years.  The  pension  amounts  to  one-sixtieth  of  this  average 
for  each  year  of  service  up  to  thirty  years;  thereafter  it  is 
increased  bv  one-fortieth  of  the  average  for  each  year,  until 
the  pension  amounts  to  6,000  francs  ($1,200),  which  is  the 
maximum.  The  pension  for  persons  injured  in  the  service  is 
one-fortieth  of  the  average  wages  for  each  year  of  service; 
in  no  case,  however,  shall  such  a  pension  be  less  than  one- 
sixth  of  the  average  wages.  Pensions  are  granted  to  widows 
and  orphans  at  rates  proportionate  to  the  pension  to  which 
the  deceased  employee  would  have  been  entitled.  An  em- 
ployee dismissed  or  retired  for  disciplinary  reasons  loses 
his  claim  to  a  pension. 

The  cost  of  the  system  is  borne  in  part  by  the  city  and  in 
part  by  the  employees.  The  contribution  by  the  latter  is 
5^2  per  cent.,  deducted  from  the  wages  during  the  entire 
time  of  service ;  also,  the  first  month's  increase  of  wages  in 
case  of  an  advance  in  pay,  is  taken  for  the  pension  fund.  The 
amount  contributed  by  the  city  is  equal  to  10  per  cent,  of 
the  total  wages  of  the  employees.  The  pension  fund  also 
has  the  benetit  of  certain  fines,  gifts  and  subventions. 

Concerning  the  working  of  the  system,  T"^nited  States  Con- 
sul Dean  ^I.  ^lasou  states:  — 

The  duty  of  ;i  citv  to  jionsion  its  employees  is  .irenerally  aoeejited 
in  tins  country,  timl.  rm  the  whole,  the  system  adopted  in  Paris  is 
cenerallv  cons'dered  satisfactory. 


300 


OLD   AGE   PENSIONS. 


[Jan. 


VIIL 

GENERAL  CONCLUSIONS  CONCERNING  NON- 
CONTRIBUTORY  PENSIONS,  COMPULSORY 
INSURANCE,  AND  UNIVERSAL  SCHEMES. 


(a)    Non-contributory  Pensions. 

The  adoption  of  any  scheme  of  non-contributory  pensions 
in  Massachusetts,  or  any  other  American  State,  seems  in- 
advisable and  impracticable.  The  main  reason  for  reject- 
ing pension  schemes  of  a  non-contributory  character  are,  in 
brief : — 

1.  The  heavy  expense.  Under  the  British  act,  out  of  a 
total  population  70  years  of  age  and  over  of  approximately 
1,270,000,  about  667,000,  in  round  numbers,  have  already 
qualified  for  pensions.  This  is  a  percentage  of  rather  more 
than  one-half.  Applying  a  similar  percentage  in  Massachu- 
setts, it  would  be  necessary  to  provide  for  at  least  50,000 
persons,  under  a  scheme  similar  to  the  British,  as  the  total 
population  of  the  State  70  years  of  age  and  over  in  1910  may 
be  estimated  on  the  basis  of  the  census  returns  of  1905  as  ap- 
proximately 105,000.  The  amount  of  the  pension  granted 
could  hardly,  if  adequate  for  American  standards  of  living, 
be  less  than  $200  per  year,  or  $1  per  week.  To  provide 
pensions  of  that  amount  for  half  the  population  70  years  of 
age  and  over  would  cost  not  less  than  $10,000,000  per  year. 
That  cost  is  practically  prohibitive  for  any  such  scheme.  It 
would  mean  an  addition  of  considerably  more  than  200  per 
cent,  to  the  State  tax,  which  is  now  $4,500,000.  The  cost 
of  providing  pensions  of  $200  for  one-half  the  aged  popu- 
lation 65  years  of  age  and  over,  which  may  be  estimated  at 
177,000,  would  be  approximately  $17,700,000  annually. 
This  would  increase  the  State  tax  by  about  400  per  cent. 


1910.]  HOUSE  — No.  1400.  301 

2.  The  enervating  influence  on  character,  especially  the 
inevitable  discouragement  of  saving.  The  thrift  habit  is 
extremely  hard  to  build  up,  and  very  easy  to  break  down.  A 
non-contributory  pension  system  would  weaken  the  motive 
to  individual  saving,  and  would  react  unfavorably  on  char- 
acter, by  lessening  the  sense  of  personal  responsibility  and  in- 
dependence. 

3.  The  disintegrating  effect  on  the  family.  A  non-con- 
tributory pension  system  would  take  away,  in  part,  the  filial 
obligation  for  the  support  of  aged  parents,  which  is  a  main 
bond  of  family  solidarity.  It  would  strike  at  one  of  the 
forces  that  have  created  the  self-supporting,  self-respecting 
American  family.  The  impairment  of  family  solidarity 
is  one  of  the  most  serious  consequences  to  be  apprehended 
from  an  experiment  with  non-contributory  pensions. 

4.  The  unfavorable  effect  on  wages.  While  imposing  a 
heavy  tax  burden  on  the  industries  of  the  State  for  the  sup- 
posed benefit  of  the  working  population,  a  non-contributory 
pension  scheme  would,  at  the  same  time,  exert  a  depressing 
effect  on  wages.  In  the  first  place,  the  establishment  of  a  pen- 
sion system  would  tend  at  the  start  to  attract  workers  into  the 
State,  thus  overcrowding  the  labor  market  and  low^ering  the 
wage  rate.  In  the  second  place,  the  direct  competition  of 
the  pensioners  would  have  some  tendency,  even  if  a  slight 
one,  to  reduce  wages.  In  the  third  place,  the  indirect  effect 
upon  wages  of  the  guarantee  of  partial  public  support  in 
old  age  would  be  still  more  unfavorable.  The  prospect  of 
a  pension  would  tempt  and  enable  workers  to  offer  their 
services  for  lower  rates.  Finally,  the  increased  burden  of 
taxation  imposed  upon  the  various  industries  for  the  support 
of  the  pension  system  would  tend  to  bring  about  reduction 
of  wages,  through  the  efforts  of  employers  to  shift  this  burden 
upon  the  shoulders  of  wage  earners.  In  these  various  ways 
the  establishment  of  a  non-contributory  pension  system  would 
operate  to  the  economic  disadvantage  of  the  wage  earners; 
what  they  received  in  the  form  of  a  pension  would,  in  the 
long  run,  be  taken  from  them  in  reduced  wages. 

In  this  connection  it  should  be  emphasized  that  no  argu- 
ment for  non-contributory  pensions  can  be  built  up  on  the 


302  OLD   AGE   PENSIONS.  [Jan. 

contention  that  wage  earners  as  a  class  do  not  receive  a  living- 
wage.  It  has  been  shown  that  the  controversy  over  this  sub- 
ject cannot  be  settled  conclusively  by  available  statistics.^ 
What  actually  constitutes  a  living  wage,  expressed  in  dollars 
and  cents,  and  what  proportion  of  the  working  class  really 
get  a  living  wage,  must  remain  matters  of  opinion.  Even  if 
it  were  true,  however,  that  the  majority  of  wage  earners  are 
not  paid  enough  to  make  adequate  provision  for  old  age, 
this  fact  would  constitute  no  reason  for  the  establishment  of 
non-contributory  jDensions.  Indeed,  this  condition  would  be 
rather  an  argument  against  the  grant  of  non-contributory 
pensions,  than  in  favor  of  such  action.  The  grant  of  sub- 
sidies in  aid  of  wages  by  the  State  would  not  create  a  genuine 
living  wage.  On  the  contrary,  the  effect  of  that  policy  must 
be,  at  the  worst,  to  depress  wages  still  further ;  at  the  best,  to 
prevent  the  advance  of  wages  to  an  adequate  living  basis. 
In  short,  the  problem  of  the  living  wage  is  not  to  be  solved  by 
any  short-cut  device  of  supplementing  wages  by  doles  from 
the  State  treasury.  Such  a  policy,  in  the  long  run,  would 
make  the  economic  condition  of  the  working  class  far  worse 
than  under  a  regime  of  absolute  non-interference  on  the  part 
of  the  State. 

It  is  an  indisputable  fact  that  during  the  last  half-century 
the  rate  of  wages  has  risen.  There  has  taken  place  also  an 
increase  of  saving,  a  reduction  of  pauperism,  and  an  im- 
provement of  the  social  condition  of  labor  in  general.  Statis- 
tical evidence  of  the  advance  of  wages,  the  increase  of  saving 
and  the  reduction  of  pauperism  is  abundant. 

(1)  Advance  of  Wages. — In  Great  Britain,  if  the  num- 
ber 100  be  taken  as  representing  the  average  wage  of  certain 
selected  trades  in  1891,  then  the  wao'es  in  earlier  vears  were 
as  follows  -  :  — 

1850, 61 

18G0, 73 

1870 83 

1880, 89 

1891 100 

1  See  pp.  244,  et  seq. 

-  See  Bowlej-,  "Wages  in  the  United  Kingdom." 


1910.] 


HOUSE  — No.  1400. 


303 


In  the  United  States  the  advance  of  wages  from  1850  to 
1890  is  shown  by  the  census  figures  for  average  annual  earn- 
ings of  persons  employed  in  manufacturing  and  mechanical 
pursuits,  as  follows:  1850,  $247;  1800,  $289;  1870,  $302; 
1880,  $347;  1890,  $445.  Wage  and  price  statistics  from 
1890  to  1907  are  given  in  bulletins  of  the  Bureau  of  Labor. 
The  number  100,  representing  the  average  for  the  ten  years 
1890-99,  is  taken  as  the  base  of  comparison  in  these  figures. 
The  figures  show  that  both  money  wages  and  real  wages  have 
risen  since  1890 ;  that  is,  while  prices  in  general  have  ad- 
vanced, wages  have  gone  up  in  even  greater  degree,  thus  leav- 
ing the  wage  earner  a  balance  of  gain.  The  following  table 
exhibits  the  upward  movement :  — 


Wages,  Prices,  Purch.\sing  Power,  1890-1907.' 


Hours  per 
Week. 

Wages  per 
Hour. 

Full  Time 
Weekly 
Earnings 

per 
Employee. 

Retail 
Prices  of 

Food, 
weighted 
according 
to  Family 
Consump- 
tion. 

FracH.^siNG  Power 

ME.tSURED   BY   RETAIL 

Prices  of  Food,  op  — 

Year. 

Hourly 

Wages. 

Full  Time 

Weekly 

Earnings 

per 

Employee. 

1890 

100.7 

100.3 

101.0 

102.4 

97.9 

98.6 

1891,  . 

100.5 

100.3 

100.8 

103.8 

96.6 

97.1 

1892,  . 

100.5 

100.8 

101.3 

101.9 

98.9 

99.4 

1893,  . 

100.3 

100.9 

101.2 

104.4 

96.6 

96.9 

1894,  . 

99.8 

97.9 

97.7 

99.7 

98.2 

98.0 

1895,  . 

100.1 

98.3 

98.4 

97.8 

100.5 

100.6 

1896,  . 

99.8 

99.7 

99.5 

95.5 

104.4 

104.2 

1897,  . 

99.6 

99.6 

99.2 

96.3 

103.4 

103.0 

1898.  . 

99.7 

100.2 

99.9 

98.7 

101.5 

101.2 

1899,  . 

99.2 

102.0 

101.2 

99.5 

102.5 

101.7 

1900,  . 

98.7 

105.5 

104.1 

101.1 

104.4 

103.0 

1901,  . 

98.1 

108.0 

105.9 

105.2 

102.7 

100.7 

1902,  . 

97.3 

112.2 

109.2 

110.9 

101.2 

98.5 

1903,  . 

96.6 

116.3 

112.3 

110.3 

105.4 

101.8 

1904,  . 

95.9 

117.0 

112.2 

111.7 

1 

104.7 

100.4 

1905,  . 

95.9 

118.9 

114.0 

112  4 

105.8 

101.4 

1906,  . 

95.4 

124.2 

118.5 

115.7 

107.3 

102.4 

1907,  . 

95.0 

128.8 

122.4 

120.6 

106.8 

101  5 

•  See  "Bulletin  of  Bureau  of  Labor,"  No.  77,  1908. 


304 


OLD   AGE   PENSIONS. 


[Jan, 


Wage  statistics  for  Massachusetts  are  given  in  the  annual 
report  on  the  "  Statistics  of  Manufactures."  The  report  for 
1907  shows  a  general  advance  of  wages  during  the  ten-year 
period  1897-1907.  For  the  purpose  of  this  presentation  the 
wage  earners  are  divided  into  three  classes,  according  to  the 
amounts  of  the  weekly  wages  as  follows :  first,  the  high-wage 
class,  including  wage  earners  paid  $12  a  week  and  over; 
second,  the  medium-wage  class,  including  those  paid  from  $8 
to  $12  a  week;  third,  the  low-wage  class,  including  those  paid 
less  than  $8  a  week.  It  appears  that  during  the  ten-year 
period  the  proportion  of  workers  in  the  high  and  medium 
wage  class  increased  considerably,  while  that  in  the  low-wage 
class  declined.  For  nine  leading  industries  the  percentage 
of  workers  in  the  high-wage  class  was,  in  1907,  30.91  per 
cent.,  as  compared  with  only  19.21  per  cent,  in  1897;  in  the 
medium-wage  class  the  percentage  rose  from  29.18  to  37.47; 
in  the  low-wage  class  the  percentage  fell  from  51.61  to  31.62. 

(2)  Increase  of  Saving.  —  The  statistics  of  savings  bank 
deposits  show  that  there  has  taken  place  a  notable  increase  in 
the  number  of  depositors,  the  amount  of  deposits,  the  average 
amount  of  the  individual  deposits,  and  the  proportion  of  de- 
positors to  the  population.  The  following  tables  give  the 
figures  for  the  United  States  and  for  Massachusetts :  — 


Statistics  of  Savings  Bank  Deposits  in  United  States. 


Year  (Nov.). 

Number  of 
Depositors. 

Total 

Deposits 

(Millions). 

Approxi- 
mate 
Average 
Amount  per 
Depositor. 

Depositors 

per  100 
Population. 

Deposits 

to  Each 

Person  of 

Population. 

1850, 
1860, 
1870, 
1880, 
1890, 
1900, 
1905, 
1906, 
1907, 
1908, 

251,354 
693,870 
1,630,870 
2,335,582 
4,258,893 
6,107,083 
7,696,229 
8,027,192 
8,588,811 
8,705,848 

43 

149 

550 

819 

1,550 

2,390 

3,093 

3,300 

3,495 

3,661 

$170 
215 
340 
350 
365 
390 
400 
410 
405 
420 

1 

2 

4 

5 

7 

8 

9 

9i 
10 
10 

$1  90 

4  80 

4  00 

6  00 

25  00 

31  00 

38  00 

39  00 

41  00 

42  00 

1910.] 


HOUSE  — No.  1400. 


305 


Statistics  of  Savings  Bank  Deposits  in  Massachusetts. 


Yeak  (Nov.). 


Number  of 
Depositors. 


Total 
Deposits 
(Millions). 


1850, 
1860, 
1870, 
1880, 
1890, 
1900. 
1905, 
1906, 
1907, 
1908, 


78,823 

230,068 

488,797 

706,395 

1,083,017 

1,535,009 

1,829,487 

1,908,378 

1,971,644 

1,973,926 


13,660 
45,054 
135.745 
218,047 
353,592 
540,403 
662,808 
694,081 
706,940 
709,519 


Approxi- 
mate 
Average 
Amount  per 
Depositor. 


$174 
195 
277 
308 
326 
352 
362 
363 
359 
359 


Depositors 

per  100 
Population. 


Deposits 

to  Each 

Person  of 

Population. 


20 
35 
40 
50 
55 
60 
62 
63 
63 


$14  00 
36  00 
93  00 
122  00 
158  00 
193  00 
221  00 

228  00 

229  00 
227  00 


It  should  also  not  be  forgotten  that  there  has  been  a  nota- 
ble development  of  saving  in  the  form  of  industrial  insurance 
during  the  last  generation.  In  1907  there  were  18,849,357 
industrial  policies  in  force  in  the  United  States,  representing 
insurance  to  the  amount  of  $2,577,896,941. 

(3)  Decline  of  Pauperism.  —  The  decline  of  pauperism 
in  Great  Britain  is  shown  by  figures  presented  in  the  report 
of  the  Royal  Commission  on  the  Poor  Laws,  1909.  It  ap- 
pears that  the  average  number  of  persons  who  received  poor 
relief  per  1,000  of  the  population  was^ :  — 


31.2, 
26.6, 
23.8, 
22.2, 
22.1, 


in  period  1871-79 
in  period  1880-87 
in  period  18S8-95 
in  period  1896-1905 
in  period  1907 


In  the  United   States,   the  number  of  paupers   in    alms- 
houses per  100,000  of  the  population  was-:  — 


132, 
116, 
107. 


in  1880 
in  1890 
in  1903 


>  Report  Royal  Commission  on  Poor  Laws,  1909,  p.  20. 

2  Special  report,  United  States  Census:    "Paupers  in  Almshouse-s,"  p.   5. 


306 


OLD   AGE   PENSIONS. 


[Jan. 


The  special  United  States  censns  report  on  "  Paupers  in 
Almshouses,"  1904,  states,  concerning  pauper  statistics  prior 
to  1880:  — 

Although  the  statistics  obtained  in  earlier  censuses  do  not  permit 
valid  comparison,  because  they  include  an  unestablished  number  of 
outdoor  poor,  while  those  of  recent  times  exclude  all  figures  except 
those  for  inmates  of  institutions,  yet  it  is  worth  while  to  note  that 
the  census  returns  for  1S50  give  the  ratio  of  217.1  paupers  per 
100,000  of  population ;  for  1860,  the  ratio  of  263.8 ;  and  for  1870,  the 
ratio  of  199.  After  making-  due  allowance  for  exaggerations,  result- 
ing from  the  inclusion  of  non-institutional  poor,  these  ratios  still 
present  evidence  of  a  notable  decline  in  the  number  of  almshouse 
paupers  per  100,000  of  population  since  1850.' 

The  pauper  statistics  for  Massachusetts,  given  in  the  an- 
nual reports  of  the  State  Board  of  Charity,  show  a  con- 
siderable decline  in  the  proportion  of  almshouse  inmates  to 
the  population  since  1863,  the  first  year  for  which  statistics 
are  given.  During  the  last  ten  years  the  population  of  Mas- 
sachusetts has  increased  about  50  per  cent.,  while  the  total 
number  of  paupers  has  declined  slightly,  being  28,498*  in 
1898  and  28,200  in  1908.  The  following  table  gives  the 
number  in  city  and  town  almshouses,  and  the  proportion  of 
the  total  population- :  — 


Number  in  City  and  Town  Alm 

SHOUSES. 

Year. 

No.  of 
Paupers. 

Per  1,000  of 
Population. 

1863 

1870 

1880 

1890 

1900 

1908 

3,233 
2,752 
3,698 
4,528 
4,948 
4,533 

2i  + 
2  — 
2  + 
2  + 
2i  + 
li- 

The  last  annual  report  of  the  State  Board  of  Charity,  for 
the  year  1909,  records  the  recent  closing  of  six  almshouses.^ 

1  Special  report.  United  States  Census:   "Paupers  in  Almshouses,"  p.  5. 

2  Report  of  State  Board  of  Charity,  1909,  p.  159. 
5  Ibid.,  p.  5. 


1910.]  HOUSE  — No.  1400.  307 

It  should  be  remarked  that  the  decline  of  pauperism  shown 
bj  official  statistics  is  not  to  be  attributed  solely  to  the  in- 
creased well-being  of  the  mass  of  the  population.  It  has 
been  brought  about  in  part  by  changes  in  methods  of  deal- 
ing with  the  dependent  and  defective  classes.  Formerly,  the 
almshouse  was  practically  the  only  refuge  for  unfortunates 
of  every  description.  Now,  other  institutions  of  relief  pro- 
vide for  many  persons  who  otherwise  would  be  forced  to 
become  inmates  of  almshouses.  The  number  of  hospitals, 
asylums,  homes  and  other  institutions  has  multiplied  during 
the  last  generation.  Other  factors  in  the  diminution  of  the 
almshouse  population  are  pointed  out  in  the  United  States 
census  report  on  "  Paupers  in  Almshouses,"  by  Mr.  John 
Koren :  — 

More  adequate  legislation  governing'  almshouses  and  better  methods 
of  administration  have  also  contributed  toward  a  diminution  of  the 
almshouse  population.  Finally,  recent  years  have  witnessed  an 
extraordinai-y  development  of  rationally  organized  ehai'ity  work, 
chiefly  of  a  private  nature,  which  has  striven  with  telling  effect  to 
make  the  poor  self-helping,  and  to  distribute  destitute  children  among 
families,  thus  saving  so  far  as  possible  the  dependents  from  institu- 
tional life.^ 

Due  allowance  for  the  influence  of  these  contributing  fac- 
tors does  not,  however,  destroy  the  significance  of  the  decline 
of  pauperism  as  an  index  of  a  rising  standard  of  wages  and 
living,  and  an  advance  in  resourcefulness  and  independence 
throughout  the  population. 

In  this  connection,  the  fact  disclosed  by  the  report  of  the 
British  Royal  Commission  on  the  Aged  Poor  that  the  num- 
ber of  indoor  paupers,  or  almshouse  inmates,  in  ]n-oportion  to 
the  population,  has  increased  in  Great  Britain  since  1900 
is  highly  significant.  The  last  annual  report  of  the  Local 
Government  Board  shows  also  an  increase  of  the  number  of 
indoor  jiaupers  of  nil  ages  during  the  last  six  months  of 
1908,-  The  report  of  the  Poyal  Commission  on  the  Aged 
Poor  connects  this  recent  increase  of  indoor  paupers  with  the 
movement  for  old  age  pensions,  which  culminated  in  the  en- 

1  Special  Report,  United  States  Census,  "Paupers  in  Almshouses."  p.  9. 

2  Thirty-eighth  annual  report  of  the  Local  Government  Board,  1908-09,  p.  12. 


308  OLD   AGE   PENSIONS.  [Jan. 

actment  of  the  old  age  pension  law  of  1908.     Kegarding  the 
causes  of  the  increase,  this  striking  statement  is  made :  — 

The  chief  of  these  we  consider  to  be  the  growing  attractiveness  of 
poor  law  institutions,  and  the  tendency,  consequent  upon  the  old  age 
pensions  movement,  to  regard  outdoor  relief  as  a  pension.  It  has 
been  suggested  that  a  cause  may  be  found  in  the  weakness  of  a  sense 
of  filial  responsibility  in  the  present  generation ;  but,  in  our  opinion, 
the  increase  of  aged  pauperism  and  the  decrease  in  filial  duty  are 
both  alike  etf ects  of  a  common  cause ;  viz.,  the  general  feeling  that  the 
State  is  able  and  willing  to  make  provision,  and  even  lavish  pro- 
vision, for  parents  whose  sons  fail  to  support  them.  We  believe 
that  if  the  position  is  clearly  defined,  and  a  consistent  policy  laid 
down  both  as  to  pensions  and  poor  law  relief,  the  natural  feeling 
between  parents  and  children  will  again  assert  itself.  Meanwhile,  we 
consider  it  important  to  remember  that  the  proportion  of  those  who 
actually  receive  poor  law  relief,  even  under  its  present  conditions,  is 
but  small.  According  to  our  census  for  1906,  the  j^aupers  over  60 
years  of  age  (excluding  casuals)  were  only  14.8  per  cent,  of  the  total 
population  of  that  age,  leaving  85.2  per  cent,  otherwise  maintained. 
We  consider  it  of  paramount  importance  that  any  steps  which  are 
taken  with  a  view  to  assisting  the  14.8  per  cent,  shall  not  be  such  as 
will  diminish  the  resources  by  which  the  85.2  per  cent,  are  now 
maintained.^ 

(^  )  Further  Considerations.  —  The  process  of  social  bet- 
terments clearly  manifest  in  the  advance  of  wages,  the  in- 
crease of  saving  and  the  decline  of  pauperism,  will  continue, 
unless  the  forces  that  have  been  bringing  it  about  are  under- 
mined by  unwise  social  legislation.  The  main  force  to  be 
conserved  here  is  the  spirit  of  individual  initiative,  inde- 
pendence, responsibility,  self-reliance  and  ambition  among 
the  people  at  large.  An  experiment  with  non-contributory 
pensions  would  strike  directly  at  this  mainspring  of  social 
progress.  The  number  of  the  deserving  poor  who  really  need 
pensions  is,  fortunately,  not  large  in  this  State.  By  estab- 
lishing a  pension  system  for  the  benefit  of  the  few  who  may 
perhaps  need  such  aid,  the  State  would  strike  a  blow  at  the 
resources  of  thrift,  individual  responsibility  and  family  in- 
tegrity, which  have  enabled  the  great  majority  of  the  popu- 
lation  to   maintain   themselves   in    self-supporting   indepen- 


1  Report  of  the  Royal  Commission  on  the  Aged  Poor,  pp.  177,  178. 


1910.]  HOUSE  — No.  1400.  309 

dence.  In  the  impatient  effort  to  help  things  forward  at  a 
faster  pace,  we  should,  by  attempting  an  experiment  with 
non-contributory  pensions,  immediately  retard  and  ultimately 
reverse  the  process  of  social  betterment. 

The  disastrous  check  to  the  process  of  social  betterment 
which  must  result  from  an  experiment  with  non-contribu- 
tory pensions  has  been  clearly  pointed  out  by  the  Hon.  W. 
E.  H.  Lecky,  in  these  words :  — 

The  first  and  most  vital  condition  of  any  sound  legislation  for  the 
relief  of  poverty  is  that  it  should  not  impair  these  industrial  quali- 
ties, or  weaken  these  vast  voluntary  organizations  of  self-help  which 
are  their  result.  Can  it  he  said  that  the  old  age  pension  policy  is 
compatible  with  this  condition?  It  proposes  to  open,  in  addition  to 
the  existing  system  of  poor  relief,  a  new  fund,  amounting  to  many 
millions  of  pounds  a  year,  and  drawn  from  compulsory  taxation,  for 
the  purpose  of  subsidizing  simple  poverty;  a  fund  to  which  it  is  to 
be  rather  creditable  than  otherwise  to  resort ;  a  fund  which  is  intended 
to  deal,  not  with  exceptional  calamity,  but  with  that  which  springs 
from  the  mere  efflux  of  time,  and  which  is,  beyond  all  others,  the 
most  normal  and  most  easily  foreseen.  It  proposes  to  teach  the 
whole  working  population  to  look  to  the  State,  and  not  to  them- 
selves, for  the  provision  for  their  old  age  and  for  the  old  age  of 
those  who  might  be  dependent  on  them,  and  thus  to  destroy  the  most 
powerful  of  all  motives  to  thrift,  the  very  mainspring  of  productive 
and  self-sacrificing  industry.  And  it  proposes  to  do  this  at  a  time 
when  wages  are  higher  than  they  have  ever  been  before ;  when  volun- 
tary societies  for  securing  the  poor  from  want  are  flourishing  and 
increasing  as  they  have  never  done  before;  when  the  rapid  decline 
of  pauperism  is  one  of  the  most  marked  and  most  universally  recog- 
nized signs  of  national  improvement.  Can  it  be  seriously  believed 
that  the  addition  of  many  millions  a  year  to  the  State  funds  directly 
employed  in  the  relief  of  poverty  will,  in  the  long  run,  tend  to 
diminish  pauperism  or  to  encourage  self-reliance  and  thrift"?' 

In  similar  vein  it  has  been  well  said  by  another  critic  of 
the  policy  of  non-contributory  pensions :  — 

The  establishment  of  such  a  system  would  constitute  a  definite 
abandonment  of  the  hope  that  any  large  proportion  of  the  poor  will 
ever  be  able  to  pro\dde  for  their  old  age,  by  the  improvement  of 
wages  and  increase  in  their  sense  of  responsibility." 

1  W.  E.  H.  Lecky,  article  in  "  Forum."  February,  1900,  pp.  694,  695. 
»  "Old  Age  Pensions:  a  collection  of  Short  Papers,"  p.  12. 


310  OLD   AGE   PENSIONS.  [Jan. 

A  non-contributory  pension  system  is  simply  a  counsel  of 
despair.  If  such  a  scheme  be  defensible  or  excusable  in  this 
country,  then  the  whole  economic  and  social  system  is  a 
failure.  The  adoption  of  such  a  policy  would  be  a  confes- 
sion of  its  breakdown.  To  contend  that  it  is  necessary  to 
take  this  course  is  to  assume  that  members  of  the  working 
class  either  cannot  earn  enough,  or  cannot  save  enough,  to 
take  care  of  themselves  in  old  age.  If  that  be  true,  then 
American  democracy  is  in  a  state  of  decay  which  no  system 
of  public  doles  could  possibly  arrest,  but  would  rather  hasten. 

The  investigation  carried  on  by  this  commission  has  not 
revealed  the  existence  of  any  general  demand  for  the  estab- 
lishment of  non-contributory  pensions.  The  weight  of  opin- 
ion expressed  at  the  public  hearings  held  in  various  parts  of 
the  State,  at  the  private  sessions  of  the  commission,  and  in 
letters  from  employers  throughout  the  State,  has  been  against 
non-contributory  pensions.  In  England,  the  present  pen- 
sion scheme  was  adopted  in  response  to  a  practically  irre- 
sistible pressure  for  such  action.  Fortunately,  no  pressure 
of  the  kind  has  thus  far  been  felt  in  this  State.  In  the  ab- 
sence of  an  effective  demand  for  legislation  of  this  character, 
it  is  at  least  premature  to  consider  any  scheme  of  non-con- 
tributory pensions. 

(b)     Compulsory  Insurance. 

The  adoption  of  any  scheme  of  compulsory  insurance  in 
this  State  appears  to  be  inexpedient  at  the  present  time. 
The  practical  objections  to  the  principle  of  compulsion  are 
weighty.  The  idea  itself  is  essentially  distasteful  to  Ameri- 
cans. In  England  it  was  abandoned  as  quite  out  of  the 
question,  in  view  of  the  prejudice  against  compulsion.  In 
this  Commonwealth  this  practical  objection  is  reinforced  by 
constitutional  difficulties  that  stand  in  the  way  of  any  work- 
able scheme  of  compulsory  insurance.  In  view  of  these  con- 
ditions, it  would  be  futile  to  recommend  any  compulsory 
insurance  system  at  this  time.  Whatever  the  outcome  of 
American  experiments  with  social  insurance  may  be,  whether 
in  the  direction  of  the  final  establishment  of  compulsory  sys- 
tems, or  the  extension  of  voluntarv  schemes,  the  introduction 
of  the  former  can  hardly  be  seriously  considered  now.     In 


1910.]  HOUSE  — No.  1400.  311 

any  event,  long  training  in  the  development  of  voluntary  in- 
surance agencies  seems  desirable,  to  furnish  the  preparation 
and  foundation  for  any  scheme  of  State  insurance,  if  such 
should  be  found  ultimately  necessary  and  desirable. 

It  is  conceivable,  however,  that  the  final  solution  of  the 
problem  of  old  age  insurance  may  be  found  in  some  system 
of  obligatorv  State  insurance.  That  is  the  conclusion  to 
which  many  impartial  students  of  this  subject  have  come. 
For  example,  the  authors  of  the  two  most  recent  works  in 
English  dealing  with  this  subject.  Prof.  Charles  R.  Hender- 
son and  Mr.  Frank  W.  Lewis,  are  in  substantial  agreement 
that  nothing  short  of  obligatory  State  insurance  will  solve 
this  problem. 

The  various  schemes  of  insurance  thus  far  put  into  opera- 
tion in  this  country  are  regarded  bv  Professor  Henderson  as 
the  beeinnino's  of  a  movement  toward  obligatory  insurance. 
He  writes :  — 

The  cities  have  ah'eady  recognized  their  duty  to  care  for  the  police- 
men, firemen  and  teachers;  and  it  will  be  difficult  to  answer  the 
question  of  other  employees  of  cities,  many  of  them  far  more  in  need 
of  protection,  why  they  should  not  be  included.  The  nation  and  the 
States  have  already  declared  it  to  be  our  duty  to  shelter  the  aged 
and  wounded  soldier;  why  should  the  victims  of  the  "  armj'  of 
labor"  be  neglected?  They  also  have  served  their  country  in  occu- 
pations even  more  dangerous  and  destructive  than  war,  and  quite  as 
useful.  Public  poor  relief  has  already  acknowledged  the  duty  of 
the  community  to  support  its  members  who  are  incai)able  of  labor; 
but  experience  has  taught  that  this  method  tends  to  humiliate  and 
degrade  the  recipients,  and  it  is  manifestly  better  from  every  point 
of  view  to  prevent  the  need  of  appeal  to  poor  relief  by  creating  an 
insurance  fund,  so  far  as  this  is  possible.' 

Professor  Henderson  quotes  with  approval  the  following 
remark  of  Dr.  Zaeher,  perhaps  the  leading  authority  in  Eu- 
rope on  the  subject  of  workingmen's  insurance,  as  applicable 
witli  full  force  to  the  United  States:  — 

Those  lands  have  approached  most  nearly  the  ideal  of  care  for  all 
working   people   which   have    committed    themselves    to    comjiulsory 

1  C.  R.  Henderson,  •'Industrial  Insurance  in  the  United  States,"  1909,  pp.  308,  309. 


312  OLD   AGE   PENSIONS.  [Jan. 

insurance.  With  compulsory  insurance  laws  the  end  is  reached  in  a 
comparatively  short  time;  while  even  with  State  subsidies  voluntary 
plans  have  helped  only  a  part  of  the  population  imperfectly,  and 
those  who  most  need  the  protection  of  insurance  not  at  all.' 

Professor  Henderson  concludes :  — 

Our  problem  is  essentially  the  legal  question:  How  can  we  intro- 
duce obligatory  insurance  in  this  country  without  conflict  with  our 
written  constitutions  and  with  the  traditions  of  the  court  1' 

Mr.  Lewis  reaches  the  conclusion  that  State  insurance  is 
desirable  and  inevitable ;  that  the  insurance  must  be  compul- 
sory ;  and  that  it  should  be  contributory,  the  cost  being  borne 
entirely  by  the  insured.     He  writes :  — 

If  you  reject  as  unscientific  and  iu  the  broadest  sense  impracticable 
the  schemes  outlined  in  recent  legislation,  what  fundamental  principle 
shall  be  applied  to  further  objects'?  The  answer  can  be  compre- 
hended in  the  sentence:  They  must  be  contributory,  and  they  cannot 
be  made  effectually  contributory  without  compulsion.  ...  If,  then, 
there  must  be  insurance  against  old  age  and  invalidity,  and  if  it  must 
be  contributory  and  compulsory,  how  shall  the  charges  be  met?  There 
can  be  but  one  logical  answer :  The  cost  must  be  borne  by  the  industry 
which  consumes  the  labor. 

In  favor  of  compulsion,  Mr.  Lewis  argues  as  follows :  — 

The  State  should  not  invoke  compulsion  for  trivial  reasons;  but 
when  large  interests  are  involved,  concerning  the  welfare  of  the 
greater  portion  of  its  inhabitants,  and  a  desired  end  can  be  accom- 
plished only  through  compulsion,  it  ought  not  to  hesitate.  Is  the 
insurance  of  Avoi'kmen  of  such  importance  and  urgency  as  to  justify 
compulsion  on  the  part  of  the  State  to  secure  it  effectively?  Such 
insurance  cannot  be  made  general  in  its  application  without  com- 
pulsion. No  form  of  persuasion  could  be  effectively  employed  by  the 
State  which  would  not  involve  features  far  more  objectionable  than 
compulsion.  As  long  as  any  scheme  is  entirely  voluntary  it  will  be 
evaded  by  the  person  and  the  class  who  most  need  insurance;  the 
evasion  of  one  would  weaken  those  nearest  him  socially,  and  the  con- 
tagion of  improvidence  would  spread  to  the  thrifty.  Any  plan  for 
State  insurance,  purely  voluntary,  would  show  in  its  operation  the 


1  C.  R.  Henderson,  "Industrial  Insurance  in  the  United  States,"  1909,  p.  311. 

2  Ibid.,  p.  312. 


I 


1910.]  HOUSE  — No.  1400.  313 

same  defects  which  make  all  existing  insurance  institutions  unsatis- 
factory. But  it  might  be  confidently  expected,  even  if  there  had  been 
no  demonstration  of  the  fact  elsewhere,  that  cominilsory  insurance, 
when  fully  understood  and  appreciated,  would  result  in  the  ready 
acquiescence  of  those  concerned,  as  has  been  the  result  in  the  case  of 
many  obligatory  laws.  ... 

It  is  premised  that  there  is  no  compulsion  upon  the  willing.  The 
law-abiding  citizen  is  not  conscious  of  any  restraint  under  laws 
against  disorder  or  crime;  the  thoughtful  citizen  does  not  resent 
the  regulations  which  require  him  and  his  neighbors  to  do  that  which 
they  should  cheerfully  unite  in  doing  for  the  common  good.  We  are 
accustomed  by  the  long  practice  of  civilized  nations  to  a  great 
variety  of  laws  Avhich  are  made  obligatory  for  the  benefit  of  all.  We 
have  compulsory  education,  compulsory  sanitary  and  quarantine 
regulations,  compulsory  requirements  respecting  the  spread  of  nox- 
ious insects  and  plants,  compulsory  contributions  for  the  support  of 
the  poor.  These  all  rest  lightly  on  the  orderly  and  patriotic  citizen; 
rather  he  looks  upon  the  State  as  highly  beneficent  which  secures  to 
him  all  of  the  privileges  which  can  be  secured  only  by  establishing 
uniformity  of  action  by  law  of  the  general  weal.  He  does  not  feel 
the  tyranny  of  law,  but  realizes  his  ideals  of  liberty  which  can  be 
gained  only  under  law.^ 

It  should  be  pointed  out  that  the  compulsion  contemplated 
by  these  writers,  and  by  others  who  hold  similar  opinions 
regarding  the  ultimate  solution  of  this  problem,  consists  in 
enforcement  upon  the  individual  of  the  obligation  of  self- 
support  ;  that  is,  the  obligation  to  provide  for  old  age  is  rec- 
ognized as  resting  upon  the  individual,  and  not  upon  the 
State.  It  may  be  that  eventually  the  State  will  undertake 
to  enforce  this  obligation  upon  the  individual  by  law.  The 
State  may,  in  the  interest  of  all,  say  to  the  individual :  "  You 
shall  provide  for  your  old  age  through  saving  made  easy  by 
a  system  of  insurance  established  by  government,  in  order 
that  the  general  welfare  may  not  be  disturbed  by  your  com- 
ing to  the  State  for  support  in  your  old  age."  The  principle 
of  compulsory  education  has  been  adopted  and  widely  ex- 
tended. The  principle  of  compulsory  sanitation  has  been 
applied  in  various  directions.  The  principle  of  compulsory 
insurance  might  be  defended  as  a  needful  measure  of  fur- 
ther State  interference  for  the  protection  of  society  against 

»  Frank  W.  Lewis,  "State  Insurance,"  1909,  pp.  167-169.     , 


314  OLD   AGE   PENSIONS.  [Jan. 

the  burden  of  old  age  pauperism,  precisely  as  compulsory 
education  and  compulsory  sanitation  have  been  instituted  to 
protect  society  against  ignorance  and  disease.  A  system  of 
State  insurance  thus  grounded  would  be  based  on  the  prin- 
ciple of  enforced  obligation  on  the  part  of  the  individual  to 
insure  himself,  and  not  on  that  of  recognized  duty  on  the 
part  of  the  State  to  pension  all  worthy  citizens.  The  Brit- 
ish and  Australian  pension  systems  are  based  on  the  latter 
principle,  involving  the  doctrine  that  a  citizen  may  claim  a 
pension  from  the  State  as  a  civil  right.  That  doctrine  is 
distinctly  un-American.  The  opposite  principle  of  obliga- 
tory insurance,  as  here  interpreted,  is  the  only  one  that  could 
possibly  be  harmonized  with  the  American  condition,  tradi- 
tions and  ideals  of  to-day. 

(c)  Universal  Schemes. 
The  question  whether  any  pension  system  that  might  be 
adopted  should  be  universal  or  partial  need  not  be  discussed 
at  length.  The  commission  has  reached  the  conclusion  that 
if  an}'-  new  pension  scheme  were  to  be  instituted  in  this  State 
at  the  present  time  it  should  be  contributory  and  voluntary. 
The  question  whether  such  a  scheme  should  be  universal  or 
partial  as  regards  the  conditions  laid  down  for  participation, 
therefore,  becomes  relatively  unimportant;  that  is  to  say,  if 
a  non-contributory  scheme  were  to  be  adopted,  or  if  com- 
pulsory insurance  were  to  be  tried,  the  question  of  whether 
the  system  should  be  universal  or  partial  would  be  of  vital 
concern.  But  if  the  system  under  consideration  is  contribu- 
tory and  voluntary,  the  question  of  whether  it  shall  be  uni- 
versal or  partial  is  far  less  urgent.  It  is  obvious  that  the 
benefits  of  any  voluntary  contributory  system  should  be  ex- 
tended to  all  persons  who  may  be  able  and  willing  to  take 
advantage  of  its  permissive  provisions,  esj)ecially  wage  earn- 
ers. Therefore,  so  far  as  the  conditions  of  participation  are 
concerned,  the  scheme  should  be  universal  in  scope,  in  the 
sense  that  all  persons  in  need  of  the  opportunities  for  pro- 
viding against  old  age  thus  offered  may  be  allowed  to  take 
advantage  of  its  provisions.     Whether  in  practice  the  scheme 


1910.]  HOUSE  — No.  1400.  315 

would  become  imiversal  must,  of  course,  depend  upon  the 
degree  to  which  wage  earners  could  be  induced  to  avail  them- 
selves of  its  benefits.  As  a  matter  of  fact,  experience  with 
voluntary  contributory  schemes  points  to  the  inevitable  con- 
clusion that  such  a  system  never  could  become  universal  in 
its  application. 


316  OLD   AGE   PENSIONS.  [Jan. 


IX. 

CONCLUSIONS  AND  EECOMMENDATIONS  CON- 
CEKNING  PENSIONS  FOR  MUNICIPAL  AND 
OTHER  PUBLIC  EMPLOYEES. 


The  problem  of  providing  pensions  for  municipal  employ- 
ees has  been  urged  upon  the  attention  of  the  commission  by 
representatives  of  the  city  government  of  Boston  and  of  other 
cities,  and  by  representatives  of  the  organized  employees  as 
vp-ell.  The  present  practice  of  keeping  on  the  municipal  pay 
roll  superannuated  workers  who  have  lost  their  effectiveness 
means  waste  of  the  tax  payers'  money  and  demoralization  of 
the  working  force.  Considerations  of  economy  and  efficiency, 
not  to  mention  other  motives,  demand  the  establishment  of 
municipal  pension  systems.  These  considerations  are  even 
more  imperative  in  the  case  of  the  municipality  than  in  that 
of  the  private  corporation,  for  political  influences  come  into 
play  to  prevent  the  discharge  of  city  employees  who  have  out- 
lived their  usefulness.  We  therefore  recommend  the  passage 
of  a  bill  to  authorize  the  cities  and  the  towns  of  this  Com- 
monwealth to  establish  retirement  systems  for  their  employ- 
ees, and  we  submit  with  this  report  a  draft  of  such  a  bill  for 
consideration  by  the  General  Court. 

The  same  considerations  that  make  for  the  expediency  of 
pensioning  municipal  employees  hold  also  in  the  case  of  other 
public  employees,  - — •  those  in  the  service  of  the  State  and 
the  counties.  Accordingly,  we  recommend  further  the  enact- 
ment of  bills  providing  for  the  establishment  of  retirement 
systems  for  State  and  county  employees,  and  we  submit  with 
this  report  drafts  of  such  bills,  for  the  consideration  of  the 
General  Court.  The  three  bills,  providing  for  the  retire- 
ment of  municipal,  of  county  and  of  State  employees,  respec- 
tively, are  identical  in  their  essential  provisions. 

The  retirement  scheme  embodied  in  these  bills  is  based 


1910.]  HOUSE  — No.  1400.  317 

on  certain  well-defined  principles,  which,  in  our  judgment, 
should  guide  future  legislation  on  this  subject.  These  prin- 
ciples may  be  briefly  stated  thus :  — 

1.  The  scheme  is  contributory;  a  part  of  the  expense  is 
borne  by  the  beneficiaries.  This  principle  we  believe  to  be 
fundamental  and  vital.  The  objections  to  non-contributory 
pensions  which  seem  to  be  most  weighty  in  their  bearing  on 
the  case  of  public  employees  are :  — 

(a)  The  heavy  expense.  This  objection  is  an  especially 
weighty  one,  in  view  of  the  large  increase  of  public  expendi- 
ture and  public  indebtedness  in  Massachusetts  during  recent 
years.  The  incurrence  of  the  heavy  expense  that  would  be 
involved  by  the  payment  of  non-contributory  pensions  is  need- 
less, for  public  employees  can  well  afford  to  pay  at  least 
some  part  of  the  cost  of  a  retirement  system. 

(&)  The  unfortunate  effect  of  encouraging  the  adoption  of 
non-contributory  pension  schemes  by  employees  of  labor  and 
the  demand  for  non-contributory  pensions  to  be  paid  by  the 
State  to  all  aged  persons.  Any  non-contributory  pension 
system  must  exert  a  depressing  effect  on  wages,  a  demor- 
alizing reaction  on  character  and  a  disintegrating  influence 
on  the  family.  A  policy  that  threatens  social  consequences 
of  so  sweepingly  harmful  a  character  is  not  one  that  the 
State,  the  county,  the  city  or  the  to^^Ti,  as  an  employer  of 
labor,  can  afford  to  sanction. 

For  these  reasons,  we  hold  that  any  legislation  on  the  sub- 
ject  of  pensions  for  public  employees  should  be  based  on  the 
contributory  principle.  The  dubious  policy  of  non-contrib- 
utory pensions  should  not  be  encouraged  by  the  example  of 
the  municipality  or  the  State,  It  is  true  that  much  of  the 
existing  pension  legislation  for  firemen,  policemen  and  teach- 
ers is  based  on  the  non-contributory  principle.  There  are, 
however,  special  features  attaching  to  these  occupations,  that 
may  perhaps,  justify,  or  at  least  excuse,  the  payment  of  non- 
contributory  pensions  to  employees  of  these  classes.  These 
occupations  involve  a  degree  of  danger,  devotion  and  sacri- 
fice that  does  not  attach  to  ordinary  employment  in  the  public 
service.  In  any  event,  whatever  may  be  done  in  the  future 
toward  the  extension  of  pension  provisions  for  all  classes  of 
public  employees  should  be  on  the  contributory  basis. 


318  OLD  AGE   PENSIONS.  [Jan. 

On  the  other  hand,  the  scheme  embodied  in  bills  presented 
by  the  commission  is  not  wholly  contributory.  The  expense 
is  divided  between  the  employees  and  the  State,  county,  city 
or  town  in  approximately  equal  proportions.  It  is  just  and 
right  that  the  State,  county,  city  or  town  should  contribute 
something  to  the  funds  out  of  which  pensions  to  superannu- 
ated employees  are  paid.  Such  contributions  should  be  re- 
garded as  in  the  nature  of  extra  compensation  for  long,  faith- 
ful and  efficient  service;  that  is,  in  addition  to  the  payment 
of  current  wages,  the  public  employer  pays  a  special  extra 
allowance  to  workers  who  remain  in  the  service  a  certain 
period  of  years  and  reach  a  certain  age.  This  is  the  logical 
justification  for  contributions  to  pension  funds  by  employ- 
ers of  labor,  whether  private,  corporate  or  public. 

2.  The  scheme  is  co-operative ;  the  employees  share  in  the 
management  of  the  retirement  system.  Furthermore,  they 
are  guaranteed  certain  definite  contractual  rights.  The  pay- 
ments cannot  be  withdrawn  or  discontinued  by  the  employer 
at  will,  as  in  the  case  of  most  non-contributory  pension  sys- 
tems established  by  private  corporations.  The  proposed 
retirement  scheme  for  public  employees  is  not  autocratic 
and  arbitrary. 

3.  The  scheme  is  compulsory  in  its  application  to  em- 
ployees who  enter  the  service  after  its  adoption.  This  degree 
of  compulsion  seems  essential  to  the  success  of  any  pension 
system.  It  can  hardly  work  any  hardship  or  cause  any  griev- 
ance in  the  case  of  any  employee.  The  person  who  does  not 
wish  to  submit  to  an  assessment  upon  wages,  for  the  provision 
of  a  retirement  allowance  for  himself,  may  decline  to  take  ser- 
vice with  the  State,  county,  city  or  town.  If  he  enters  the 
service,  he  accepts  the  compulsory  assessment  upon  wages 
as  one  of  the  conditions  of  the  employment.  For  employees 
already  in  the  service  when  the  scheme  goes  into  operation, 
participation  is  voluntary.  Certain  features  of  the  plan, 
however,  render  it  so  attractive  for  employees  of  this  class 
that  the  majority  M^ould  doubtless  elect  to  participate. 

Regarded  from  the  point  of  view  of  these  fundamental 
principles  embodied  in  the  scheme,  it  might  be  described  as 
a  system  of  compulsory  old  age  insurance  for  public  em- 
ployees, on  a  contributory  and  co-operative  basis. 


1910.]  HOUSE  — No.  1400.  319 

Such  are  the  underlying  principles  of  the  scheme.  In 
laying  down  the  details  of  the  plan,  the  commission  has  made 
use  of  the  Boston  &  Maine  pension  act,  chapter  435,  Acts 
of  1909,  and  the  municipal  pension  bill  based  upon  this  act. 
House  Xo.  1448,  which  was  introduced  in  the  last  Legisla- 
ture. The  scheme,  as  finally  formulated  by  the  commis- 
sion, diifers  from  these  measures,  however,  in  important 
particulars.  Its  main  details  are  as  follows :  — 

Provision  is  made  for  the  creation  of  an  annuity  and  pen- 
sion fund  by  joint  contributions  of  employer  and  employee. 
The  contributions  of  the  latter  are  limited  to  a  maximum  of 
5  per  cent,  of  the  wages;  the  former  contributes  an  equiva- 
lent amount. 

In  general,  each  employee  w^ho  is  retired  under  the  pro- 
visions of  the  plan  receives  an  annuity  of  such  amount  as 
his  contributions  have  earned  for  him,  and,  in  addition,  a 
pension  of  equivalent  amount  provided  by  the  contributions 
of  the  State,  county,  city  or  town.  In  no  case  shall  the  com- 
bined sum  of  annuity  and  pension  paid  to  an  employee  be 
less  than  $200  per  year. 

Retirement  may  take  place  for  old  age,  for  long  service 
or  for  permanent  disability.  The  age  of  voluntary  retire- 
ment is  fixed  at  60 ;  of  compulsory  retirement,  at  TO ;  a 
period  of  fifteen  years  of  continuous  service  is  also  required 
as  a  condition  of  retirement  for  age.  Retirement  for  long 
service  may  take  place  after  thirty-five  years  of  uninter- 
rupted employment.  Retirement  for  permanent  disability 
may  take  place  at  any  age  or  after  any  period  of  service. 

The  amount  of  the  retirement  allowance,  including  an- 
nuity and  pension,  depends  on  the  wages  of  the  employee, 
the  rate  of  contribution  and  the  length  of  service.  To  illus- 
trate: in  the  case  of  an  employee  entering  the  service  at  25 
years  of  age  and  contributing  regularly  to  the  pension  fund 
at  the  rate  of  5  per  cent,  from  an  average  annual  wage  of 
$800,  the  amount  of  retirement  allowance  at  the  age  of  60 
would  be  approximately  $600,  including  $300  annuity  and 
$300  pension. 

Special  provision  is  made  for  persons  already  in  the  em]iloy 
of  the  State,  county,  city  or  town  when  the  scheme  comes  into 
operation.      Such   employees   would   otherwise   not   be   ade- 


320  OLD   AGE   PENSIONS.  [Jan. 

quately  pensioned  under  the  regular  working  of  the  con- 
tributory principle.  In  addition  to  pensions  for  subsequent 
service,  therefore,  pensions  for  prior  service  are  provided. 
Under  the  latter  provision,  any  member  of  the  retirement  as- 
sociation w^ho  reaches  the  age  of  60  years,  after  fifteen  years 
of  continuous  service,  and  retires  or  is  retired,  receives,  in 
addition  to  the  regular  allowance  to  which  he  may  be  en- 
titled, an  extra  amount  paid  by  the  State,  county  or  city  or 
town,  equal  to  the  amount  of  the  annuity  that  he  might  have 
earned  if  the  retirement  system  had  been  in  operation  when 
he  entered  the  service,  and  if  he  had  made  regular  contribu- 
tions from  that  date  to  the  time  of  its  establishment.  Further- 
more, employees  who  had  reached  the  age  of  60  when  the 
system  was  established,  and  also  employees  who  had  reached 
the  a2:e  of  55,  and  became  members  of  the  association,  mav 
be  retired  with  pensions  for  prior  service  without  having 
completed  the  otherwise  necessary  service  period  of  fifteen 
years.  Thus,  provision  is  made  in  the  scheme  both  for  pres- 
ent and  for  future  employees,  with  the  single  exception  of 
persons  entering  the  service  after  the  age  of  55.  Persons  of 
that  age  cannot  acquire  a  right  to  an  annuity  and  pension, 
because  they  cannot  attain  the  service  period  of  fifteen  years, 
fixed  in  the  bill,  before  the  age  of  compulsory  retirement, 
namely,  70  years.  Participation  in  the  scheme  is,  therefore, 
prohibited  to  persons  of  this  age.  This  seems  desirable,  in 
view  of  the  effect  that  it  may  be  expected  to  have  in  dis- 
couraging the  future  employment  of  persons  of  advanced 
age. 

The  scheme  provides  for  refunding  amounts  contributed 
by  employees  who  leave  the  service  of  the  State,  county,  city 
or  town.  In  case  of  withdrawal  from  the  service  for  any 
cause  other  than  death,  all  the  money  paid  in  by  the  em- 
ployee, with  regular  interest,  is  refunded.  In  ease  of  death, 
all  the  money  paid  in,  with  the  interest  earned  on  the  de- 
posits, is  paid  to  the  legal  representatives  of  the  deceased. 

The  machinery  for  administering  the  scheme  includes  a 
retirement  association  and  a  board  of  retirement.  Member- 
ship in  the  association  is  compulsory  for  all  new  employees 
except  those  who  have  already  reached  the  age  of  55,  and 


1910.]  HOUSE  — No.  1400.  321 

voluntary  for  present  employees.  The  b(»ard  is  made  np  of 
three  members,  of  whom  the  first  is  the  State,  county,  city 
or  town  treasurer,  ex  officio;  the  second  member  is  elected 
by  the  retirement  association ;  and  the  third  member  is  chosen 
by  the  other  two,  or,  in  case  of  the  failure  of  the  latter  to 
agree,  appointed  b}'  the  Governor,  the  chairman  of  the  county 
commissioners,  the  mayor  or  the  chairman  of  the  board  of  se- 
lectmen, as  the  case  may  be.  The  general  management  of  the 
retirement  system  is  in  the  hands  of  the  board.  The  latter 
is  empowered  to  make  regulations,  classify  employees  and 
fix  different  rates  of  contribution  for  the  various  classes, 
subject  to  the  maximum  and  minimum  limits  fixed  in  the  bill, 
and  to  retire  employees  for  age,  long  service  and  permanent 
disability,  according  to  the  conditions  prescribed.  The  treas- 
urer is  entrusted  with  the  custody  and  investment  of  the 
funds  of  the  retirement  system. 

The  retirement  svstem  for  citv  and  town  emplovees  is  to 
go  into  effect  only  when  ado]ited  by  referendum  vote  of  the 
citizens ;  a  referendum  provision  is  also  embodied  in  the 
retirement  bill  for  county  employees ;  the  retirement  system 
for  State  employees  becomes  operative  when  enacted  by  the 
Legislature. 

The  scheme  is  placed  under  the  supervision  of  the  State 
Commissioner  of  Insurance  as  i-egards  the  chief  actuarial 
and  administrative  featui'es.  The  Insurance  Commissioner 
is  to  prescribe  the  mortality  and  other  tables,  the  rates  of 
interest  to  be  used  in  connection  Avith  the  tables,  and  the 
methods  of  booklvceping  of  the  association.  He  shall  also 
make  an  annual  inspection  of  the  affairs  of  the  retirement 
system,  and  shall  report  the  result  in  a  manner  provided  in 
the  bill.  "While  the  board  of  retirement  is  given  adequate 
powers  of  home  rule  in  the  management  of  the  retirement 
system,  the  supervision  by  the  Insurance  Commissioner  pro- 
vides for  a  reasonable  degree  of  uniformity  and  publicity  in 
the  administration  of  all  the  retirement  systems  that  may  be 
established  under  the  bills. 


322  OLD   AGE   PENSIONS.  [Jan. 


X. 

ri^'AL  CONCLUSIONS  AND  KECOMMENDATIONS. 


We  find  that  serious  practical  difficulties  stand  in  the  way 
of  the  establishment  of  any  general  system  of  old  age  pen- 
sions by  this  Commonwealth  or  any  single  State.  Such  action 
would  place  a  heavy  burden  of  taxation  on  the  industries  of 
the  State,  and  thus  put  them  at  a  disadvantage  in  competi- 
tion with  the  industries  of  neighboring  States  unburdened  by 
a  pension  system.  It  would  also  tend  to  attract  workers 
into  the  pensioning  State,  and  thus  to  depress  the  rate  of 
wages.  In  view  of  these  and  other  considerations,  it  is  the 
opinion  of  the  commission  that  if  any  general  system  of  old 
age  pensions  is  to  be  established  in  this  country,  this  action 
should  be  taken  by  the  national  Congress,  and  not  through 
State  legislation.  This  course  of  action  was  suggested  by 
His  Excellency  Governor  Eben  S.  Draper,  in  his  inaugural 
address  of  1909,  as  follows :  — 

I  would  suggest  for  your  consideration  whether,  if  any  general 
old  ag-e  pension  scheme  were  ever  to  be  enacted,  it  would  not  be  wise 
to  have  this  a  national  proposition,  rather  than  something  to  be 
done  by  an  individual  State.  We  are  all  citizens  of  one  country,  and 
if  our  State  should  take  up  this  matter  for  consideration,  and  some 
States  do  nothing,  and  others  adopt  one  scheme,  and  still  others  a 
different  one,  it  would  produce  a  situation  which,  to  my  mind,  would 
not  be  practical  or  wise. 

lu  harmony  with  this  suggestion,  the  commission  holds 
that  it  would  be  inexpedient  for  ]\Iassachusetts  or  any  other 
State  to  adopt  a  general  system  of  old  age  pensions,  either  at 
the  present  or  at  any  time  in  the  future.  Other  special  con- 
siderations have  had  weight  in  determ-ining  the  decision  of 
the  commission  not  to  recommend  general  legislation  on  this 
subject  at  the  present  time. 


1910.]  HOUSE  — No.   1400.  323 

The  foremost  consideration  is  the  fact  that  Massachusetts 
is  definitely  committed,  by  the  savings  bank  insurance  act 
of  1907,  to  an  experiment  with  voluntary  insurance  under 
public  administration.  The  savings  bank  insurance  plan 
should  be  given  abundant  time  to  test  its  practicability  and 
adequacy  as  a  solution  of  this  problem.  We  are  of  the  opinion, 
accordingly,  that  it  would  be  premature  and  inconsistent  to 
experiment  with  any  non-contributory  or  compulsory  scheme 
until  the  savings  bank  insurance  system  has  been  allowed 
ample  opportunity  to  demonstrate  its  full  effects. 

It  seems  desirable,  furthermore,  that  the  problem  of  sick- 
ness and  accident  insurance  should  be  dealt  with  before  enact- 
ing: anv  additional  measures  of  general  legislation  concerning 
old  age  pensions  or  insurance.  In  particular,  the  present  pro- 
visions of  law  relating  to  compensation  of  workingmen  for 
industrial  accidents  are  admittedly  unsatisfactory  in  Massa- 
chusetts and  other  American  States.  Logically,  the  problem 
of  sickness  and  accident  insurance  takes  precedence  over  the 
question  of  old  age  insurance.  So  far  as  effective  provision 
is  made  for  insurance  against  sickness  and  accident,  depen- 
dency in  old  age  is  diminished,  for  the  main  causes  of  the 
latter  are  illness  and  disability  in  earlier  life.  Historically, 
the  legislation  with  reference  to  sickness  and  accident  insur- 
ance in  Germany  antedated  that  relating  to  old  age  insurance. 
The  sickness  insurance  was  established  in  1883,  the  accident 
insurance  in  1884,  and  the  old  age  insurance  not  till  1880. 

Finally,  there  is  no  considerable  demand  in  this  State 
for  the  establishment  of  a  general  scheme  of  old  age  pensions 
or  insurance.  The  hearings  held  by  this  commission  in 
various  cities  of  the  State  have  not  revealed  any  active  inter- 
est in  this  question  on  the  part  of  the  citizens.  The  attend- 
ance at  these  hearings  was  small,  and  the  expressions  of 
ojiinion  in  the  main  were  of  a  general  character.  There  is 
no  alarming  amount  of  old  age  destitution  in  this  State, 
such  as  existed  in  England  and  other  countries  of  Europe 
at  the  time  of  the  adoi)tion  of  old  age  pension  systems.  The 
comparative  statistics  of  pauperism  iu  Great  Britain  and 
]\rassachusetts,  for  examjile,  show  a  strikingly  small  propor- 
tion of  old  age  dependency  in  this  Commonwealth,  as  con- 


324  OLD   AGE    PENSIONS.  [Jan. 

trasted  with  Great  Britain.  The  number  of  paupers  of  all 
ages  per  1,000  of  the  population  is  only  8.5  in  Massachusetts, 
as  contrasted  with  24.2  in  the  United  Kingdom;  the  number 
of  paupers  65  years  of  age  and  over  per  1,000  of  the  popula- 
tion of  the  same  age  is  only  31.7  in  Massachusetts,  as  against 
172  in  the  United  Kingdom ;  and,  finally,  the  percentage  of 
paupers  65  and  over  in  the  total  pauper  population  is  only 
20.3  in  Massachusetts,  as  compared  with  35  in  the  United 
Kingdom.^  The  existing  agencies  for  the  relief  of  old  age 
destitution  in  the  State  are  abundant  and  adequate,  and  in 
the  non-dependent  portion  of  the  aged  population  there  is 
not  a  sufficient  amount  of  poverty  and  distress  to  call  for  the 
institution  of  any  sweeping  scheme  of  relief  through  pen- 
sions. Social  legislation  cannot  safely  proceed  far  in  ad- 
vance of  public  opinion  and  social  conditions. 

These  considerations  lead  to  the  conclusion  that  any  recom- 
mendation of  general  legislation  on  the  subject  of  old  age 
pensions  or  insurance  would  be  premature  at  the  present 
time.  The  proper  course  of  action  for  American  States  for 
the  immediate  future,  in  dealing  ^vith.  the  problem  of  old  age 
dependency,  was  suggested  by  President  Roosevelt  in  his 
annual  message  of  December  8,  1908.     He  said :  — 

I  call  your  attention  to  the  fact  that  definite  steps  toward  providing 
old  age  pensions  have  been  taken  in  mai]y  of  our  private  industries. 
These  may  be  indefinitely  extended  through  voluntary  association 
and  contributory  schemes,  or  through  the  agency  of  savings  banks, 
as  under  the  recent  Massachusetts  plan.  To  strengthen  these  prac- 
tical measures  should  be  our  immediate  duty;  it  is  not  at  present 
necessary  to  consider  the  larger  and  more  general  governmental 
schemes  that  most  European  governments  have  found  themselves 
obliged  to  adopt. 

In  the  line  of  this  policy,  the  following  constructive  recom- 
mendations are  offered  by  the  commission :  — 

1.  In  order  to  promote  independent  individual  saving  and 
strengthen  voluntary  thrift  agencies,  we  recommend  that 
"  thrift "  be  included  among  the  subjects  of  compulsory  in- 
struction in  the  public  schools  of  this  Commonwealth.  What- 
ever solution  of  the  problem  of  old  age  pensions  may  ulti- 


1  See  table,  p.  44. 


1910.]  HOUSE  — No.  1400.  325 

mately  be  settled  upon,  it  is  certainly  most  desirable  to 
take  every  practical  measure  to  encourage  habits  of  saving 
throughout  the  population.  The  teaching  of  "  thrift  "  in  the 
schools  should  deal  with  the  individual  and  social  ethics  of 
saving  in  general,  and  should  also  illustrate  the  principles 
of  insurance  and  investment  in  particular.  The  arithmetic 
of  saving  could  be  taught  effectively  by  using  mathematical 
examples  in  the  school  texts,  which  should  bring  out  clearly 
the  methods  of  saving  and  investing  money.  This  recom- 
mendation is  not  a  theoretical  one,  for  the  subject  of  "  thrift  " 
has  been  taught  effectively  in  the  public  schools  of  European 
countries,  notably  in  France  and  Germany. 

2.  We  commend  to  the  attention  of  employers  and  employ- 
ees throughout  the  Commonwealth  the  opportunities  for  the 
purchase  of  insurance  and  annuities  offered  by  the  Massa- 
chusetts savings  bank  insurance  department.  It  is  obvious 
that  the  degree  of  success  ultimately  attained  by  this  ex- 
periment in  voluntary  insurance  under  State  guarantee  must 
depend  u]wn  the  co-operation  and  support  of  wage  earners 
and  employers  throughout  the  State.  By  reason  of  the 
security  and  the  cheapness  of  the  insurance  provided,  this 
plan  holds  out  exceptional  advantages  to  the  working  people 
of  the  State.  The  first  full  year  of  operation  of  the  system 
has  been  conspicuously  successful.  The  two  savings  banks 
which  have  established  insurance  departments  have  main- 
tained their  guaranty  funds  and  have  paid  interest  upon 
them,  and  in  addition  have  distributed  a  dividend  of  8H  per 
cent,  to  policy  holders.^  This  record  justifies  the  commission 
in  urging  the  opportunities  afforded  by  this  system  upon  the 
consideration  of  employers  and  employerl. 

3.  "We  also  commend  to  the  consideration  of  corporations 
of  a  ]iermanent  character,  with  a  large  staff  of  employees, 
especially  public  service  corporations  in  the  cities,  the  schemes 
of  old  ago  insurance  and  pensions  which  have  been  insti- 
tuted by  various  large  concerns.  Corporations  of  this  class 
can  safely  undertake  far-reaching  projects  for  the  wnlfare 
of  their  working  force,  which  woidd  be  impossible  in  the  case 
of  small  establishments.     Several  plans  are  presented  in  this 

'  See  p.  200. 


326 


OLD   AGE   PENSIONS. 


[Jan. 


report  for  the  consideration  of  employers  who  may  contem- 
phite  the  adoption  of  a  retirement  system.  Whatever  plan 
may  be  adopted  by  employers  shonld,  in  onr  jndgment,  be 
based  on  the  contribntory  principle.  It  is  doubtful  wisdom 
for  private  employers,  as  for  the  State,  to  pay  non-contribu- 
tory pensions. 

Under  the  existing  j^rovisions  of  the  insurance  laws,  how- 
ever, it  would  jDresumably  be  impossible  for  an  employer 
in  this  State,  whether  an  individual  or  a  corporation,  to 
establish  a  contributory  pension  system  for  employees.  Any 
arrangement  for  the  creation  of  a  pension  fund  through  joint 
contributions  of  employer  and  employee  would  probably  come 
under  the  provisions  of  law  relating  to  insurance  contracts. 
It  would,  therefore,  seem  to  be  necessary  for  an  employer 
wishing  to  establish  a  contributory  pension  scheme  to  obtain 
authorization  by  special  act  of  the  Legislature.  It  seems 
desirable  that  general  legislation  should  be  enacted,  to  re- 
solve all  doubt  regarding  the  legality  of  establishing  con- 
tributory pension  schemes,  and  to  make  it  possible  for  em- 
ployers and  employees  to  institute  such  plans  without  the 
necessity  of  special  appeal  to  the  Legislature  for  authoriza- 
tion. The  commission,  therefore,  recommends  the  enact- 
ment of  a  general  law  authorizing  employers  and  employees 
to  form  associations  for  the  payment  of  annuities  or  pensions 
out  of  funds  created  by  joint  contributions  of  the  two  parties, 
under  the  supervision  of  the  Insurance  Commissioner  of 
the  Commonwealth,  and  presents  a  bill  for  this  purpose. 

4.  AVe  would,  furthermore,  direct  attention  to  the  new  op- 
portunities for  old  age  insurance  offered  by  industrial  insur- 
ance companies.  This  insurance  has  been  greatly  cheapened 
and  iin]U"oved  during  the  last  year.'  In  order  to  improve 
still  further  the  facilities  for  insurance  supplied  through 
these  agencies,  the  commission  has  been  asked  to  reconnnend 
the  passage  of  a  bill  authorizing  life  insurance  companies  to 
issue  insurance  at  special  rates  of  premium  to  members  of 
unions,  lodges  and  other  societies,  or  to  employees  who  may 
take  out  insurance  in  aggregate  of  not  less  than  100  persons, 
and  arrange  for  the  payment  of  the  premiums  without  ex- 


'  See  pp.  179  et  seq. 


1910.]  HOUSE  — No.  1400.  327 

peiise  to  the  company.  The  commission  recognizes  the  ad- 
vantages which  this  plan  offers  in  the  way  of  reducing  the 
cost  of  insurance  to  working  people.  Nevertheless,  it  is 
unable  at  the  present  time  to  advise  the  general  court  to  pass 
such  a  measure.  Objection  to  such  action  has  been  raised 
on  the  ground  that  the  "  group  insurance  "  plan  would  create 
undesirable  competition  with  the  savings  bank  insurance. 
While  such  competition  might  be  advantageous  rather  than 
detrimental,  if  the  savings  bank  insurance  system  were  an 
old  established  institution,  it  seems  undesirable,  under  exist- 
ing conditions,  while  the  system  is  in  process  of  development 
and  extension,  to  take  any  action  which  might  hamper  its 
operations  or  jeopardize  its  success.  For  this  reason,  the 
commission  is  of  the  opinion  that  the  passage  of  legislation 
enabling  life  insurance  companies  to  issue  ''  group  insur- 
ance "  at  special  rates  would  be  inexpedient  at  this  time. 

5.  We  suggest  that  in  due  time  the  laws  governing  the 
operation  of  fraternal  beneficiary  corporations  be  amended 
so  as  to  enable  these  societies  to  pay  old  age  benefits  under 
supervision  by  the  State  Insurance  Commissioner  as  regards 
rates  of  assessment  and  methods  of  administration.  The 
present  provisions  of  law  applying  to  these  organizations  do 
not  recognize  the  payment  of  old  age  benefits  as  one  of  the 
functions  of  such  societies.  Certain  unimportant  exceptions 
are  made  in  the  case  of  domestic  fraternal  beneficiary  corpo- 
rations, which  permit  the  payment  of  long  service  benefits, 
substantially  identical  with  old  age  pensions.  No  exceptions 
whatever  are  made  in  the  case  of  foreign  fraternal  beneficiary 
corporations.  A  petition  for  legislation  to  enable  these  socie- 
ties to  establish  old  age  benefit  features  has  been  presented  to 
this  commission  by  a  committee  of  one  of  the  fraternal  orders. 
We  are  of  the  o]>inion  that  the  proposed  legislation  would 
bring  about  a  desirable  extension  of  the  facilities  for  volun- 
tary insurance  against  old  age  in  this  State.  We  do  not, 
however,  submit  a  draft  of  a  bill  ])roviding  for  such  amend- 
ment, for  the  following  reasons,  'i'lic  subject  of  uniform 
State  legislation  for  the  control  of  fraternal  orders  is  now 
under  consideration  by  a  committee  of  the  National  Conven- 
tion of  Insurance  Commissioners.      A  bill  hii-  been  (lraA\Ti  by 


328  OLD   AGE   PENSIONS.  [Jan. 

this  committee,  one  feature  of  which  is  a  permissive  provi- 
sion relating  to  the  payment  of  old  age  benefits.  This  meas- 
ure, as  finally  revised  after  a  hearing  of  representatives  of  the 
fraternal  orders,  will  be  submitted  to  the  next  convention  of 
the  insurance  commissioners,  which  will  be  held  in  October, 
1910.  It  seems  obviously  desirable  to  await  the  action  of  the 
convention  embodying  a  proposed  uniform  law  for  the  regu- 
lation of  the  fraternal  orders  before  enacting  any  legislation 
on  this  subject  in  Massachusetts.  Whatever  legislation  is 
adopted  in  this  State  should  be  formulated  in  the  light  of  the 
fullest  attainable  information,  and  should  be  made  uniform, 
if  possible,  with  the  legislation  in  other  States.  While  com- 
mending the  policy  of  conferring  upon  fraternal  orders  the 
authority  to  pay  old  age  benefits  under  proper  restrictions, 
the  commission  advises  the  Legislature,  for  the  reason  stated, 
to  defer  action  on  this  question  until  the  report  of  the  National 
Convention  of  the  Association  of  Insurance  Commissioners, 
with  the  draft  of  the  bill,  shall  be  made  public.^ 

6.  We  recommend  the  enactment  of  measures  providing 
for  the  establishment  of  retirement  systems  for  public  em- 
ployees. The  reasons  for  such  action  have  been  fully  stated 
in  a  previous  chapter  of  this  report.  The  fundamental  con- 
sideration is  one  of  economy  and  efficiency.  The  retirement 
system  will  stop  the  waste  and  demoralization  now  involved 
by  the  continuance  of  worn-out  workers  in  the  public  service. 
The  retirement  system  for  employees  of  the  State,  counties, 
cities  and  towns  of  the  Commonwealth,  embodied  in  bills 
submitted  by  the  commission,  is  based  upon  the  contribu- 
tory principle.  The  present  pension  legislation  for  certain 
classes  of  municipal  employees  based  on  the  non-contribu- 
tory principle  we  believe  to  be  unwise.  We  are  of  the  opinion 
that  all  further  legislation  in  this  field  should  be  based 
squarely  on  the  contributory  principle,  and  that  future  em- 

1  The  committee  which  brought  this  question  to  the  attention  of  the  commission, 
proposed  the  following  amendment  of  section  1  of  chapter  119  of  the  Revised  Laws 
to  provide  for  the  issue  of  old  age  benefits,  according  to  the  plan  proposed  by  their 
order:  "Section  1.  Seven  or  more  persons,  residents  of  this  commonwealth,  may  form 
a  fraternal  beneficiary  corporation  for  the  purpose  of  providing  for  the  payment  of 
benefits  in  the  case  of  death  or  disability  or  of  both.  The  disability  may  be  temporary 
or  pennanent  and  the  result  of  sickness,  accident  or  old  age,  provided  the  period  in  life 
at  which  disability  benefits  on  account  of  old  age  commences  shall  not  be  under  seventy 
years."      (RRmainder  of  section  as  at  present.) 


1910.]  HOUSE  — No.  1400.  329 

ployees  of  the  State,  counties,  cities  and  towns  of  all  classes 
should  be  brought  under  the  provisions  of  a  general  contribu- 
tory retirement  system. 

7.  Finally,  we  advise  the  General  Court  to  pass  an  act 
providing  for  the  establishment  of  a  permanent  unpaid  com- 
mission on  old  age  pensions  and  insurance.     We  believe  this 
subject  to  be  of  sufficient  importance  to  justify  the  creation 
of  a  special  department,  to  deal  with  it  in  comprehensive 
and  systematic  fashion.     The  functions  of  such  a  commis- 
sion,   definitely   stated,   would   be:    to    act   as    a   bureau   of 
information   and   assistance   for   employers    and   employees, 
municipalities    and    counties,    with   a    view   to    aiding    and 
advising    them    regarding    the    establishment    of    retirement 
systems;  to  study  the  operation  of  schemes  of  old  age  insur- 
ance, annuities  and  pensions  in  other  States  and  countries, 
and  the  proposals  for  new  legislation  on  this  subject,  and  to 
keep   the   Legislature   and   the   public   informed   concerning 
these  matters,  through  annual  reports;  to  inquire  into  the 
working  of  existing  agencies  in  this  State  for  the  provision 
of  pensions,  annuities  or  insurance  for  the  aged,  and  to  oifer 
such  recommendations  regarding  further  action  as  they  may 
deem  expedient ;  and  to  collect  official  reports,  statistical  mat- 
ter and  other  literature  on  the  subject  of  old  age  pensions, 
annuities  and  insurance.     The  commission  would  continue 
the  work  of  investigation  begun  by  the  present  commission. 
The  legislation  on  this  subject  in  different  States  and  the 
schemes   for   dealing  with   the   problem    of   superannuation 
instituted  by  cuiployers  of  labor  arc  in  process  of  constant 
development.     It  would  be  a  distinct  advantage  to  this  Com- 
monwealth   if  the   experiments   in   this   field   could   be   fol- 
lowed and  reported  regularly  by  a  State  commission. 

The  fundamental  purpose  of  the  recommendations  thus 
offered  is  to  promote  the  habit  of  thrift  and  to  extend  the 
usefulness  of  agencies  that  furnish  opportunity  to  ]u-ovide, 
l)y  individual  saving,  against  old  age.  Thus  far  only  a 
beginning  has  been  made  in  this  field.  Until  the  possibility 
of  existing  thrift  institutions  has  been  developed  to  the  limit 
of  their  effectiveness,  it  is  premature  to  consider  resort  to 


330  OLD    AGE   PENSIONS.  [Jan. 

non-contributorj  State  pensions  or  compulsory  State  insur- 
ance. Whatever  the  ultimate  policy  may  be  which  the 
American  States  will  work  out  in  this  field  of  social  lesis- 
lation,  it  is  obviously  desirable  to  build  up,  by  every  practi- 
cal expedient,  the  habit  of  voluntary  saving  and  the  facili- 
ties provided  for  its  exercise.  Even  if  it  should  appear 
eventually  that  these  means  are  inadequate  to  the  final  solu- 
tion of  the  problem  of  old  age  dependency,  the  development 
cf  such  thrift  agencies  will  furnish  a  solid  foundation  upon 
which  to  build  a  general  scheme  of  State  pensions,  annuities 
or  insurance. 

MAGNUS  W.  ALEXANDER,  Chairman. 
JAMES  T.  BUCI^LEY. 
ARTHUR  M.  HUDDELL. 
WALTER  G.  CHASE. 
MAHALIE  R.  HODDER. 


1910.]  HOUSE  — No.  1400.  331 


DISSEXTIXG  STATEMENTS  OF  JAMES  T.  BUCK- 
LEY AXD  AETHUR  M.  IIUDDELL. 


We  desire  to  express  our  dissent  from  the  recommenda- 
tion of  the  majority  of  the  commission  that  legislation  be 
})assed   to   enable   employers   in   this   State   to   establish    re- 
tirement, annuity  or  pension  associations  for  their  employees. 
It  seems  to  ns  that  there  is  no  extensive  demand  for  such 
legislative  action,  and  that  such  legislation  is  unnecessary  and 
therefore  harmful.     AVe  would  call  attention  to  the  fact  that 
the  Statp  has  already  provided,  through  the  department  of 
savings  bank  insurance,  an  agency  by  which  employers  and 
employees  may   provide  for   retirement  pensions,   supported 
by  joint  contributions  from  the  two  parties.     A  grou]i  of  em- 
ployers and  employees  who  may  wish  to  establish  a  system 
of  retirement  pensions  may,  upon  application  to  the  savings 
bank  department,  arrange  for  the  issue  of  annuity  policies 
to  the  employees  under  conditions  by  which  the  premiums 
are  deducted  from  wages  and  paid  regularly  by  the  employer 
to   the  bank,   with   a  contribution  by  the   employer  to   the 
amount  of  one-half,  one-quarter,  or  any  other  percentage  of 
the   premium   that   may   be    agreed    upon.      This   system   of 
savings  bank    insurance   is   a    State    institution   of   absolute 
security,  which  oifers  the  opportunity  to  employers  and  em- 
ployees desiring  such  an  arrangement  to  make  provision  for 
the  payment  of  retirement  annuities  at  extremely  low  rates 
of  premium.     Tn  view  of  the  existence  of  this  institution, 
we  are  of  the  decided  o])inion  that  it  would  be  superfluous 
for  the  State  to  enact  general  enabling  legislation  for  the 
purpose  of  authorizing  employers  and  employees  to  establish 
pension  systems  of  their  own.     Furthermore,  if  a  demand  for 
such  legislation  should  arise  later,  special  bills  might  be  in- 
troduced to  fit  each  individual  case.     This  would  furnish  an 


332  OLD   AGE    PENSIONS.  [Jan. 

opportunity  for  the  education  of  the  public  along  these  lines. 
It  seems  to  us  further  that  such  legislation  would  be  inju- 
rious to  the  interests  of  the  savings  bank  insurance  system, 
the  success  of  which  ought  to  be  promoted  by  the  State  in 
every  legitimate  way. 

JAMES  T.  BUCKLEY. 

ARHUR  M.  HUDDELL. 


I  desire  to  express  my  dissent  from  the  opinions  expressed 
in  paragraphs  numbered  1,  2  and  3  of  the  "  General  Con- 
clusions concerning  Non-contributory  Pensions."  ^ 

Despite  the  close  attention  and  careful  study  given  the  old 
age  problem  during  the  life  of  this  commission,  I  am  still 
in  doubt  as  to  the  advisability,  finally,  of  adopting  the  con- 
tributory or  the  non-contributory  princij)le  in  the  granting  of 
general  old  age  pensions. 

1.  To  my  mind,  the  first  argument  advanced  against  the 
non-contributory  plan,  namely,  "  heavy  expense,"  is  fal- 
lacious; for  the  ultimate  expense  of  any  given  project  is 
the  same,  whether  that  cost  be  levied  directly  upon  those  who 
are  to  benefit  by  the  scheme,  as  in  the  proposed  contributory 
schemes,  or  indirectly  upon  the  same  beneficiaries  through 
the  medium  of  the  State  tax. 

2.  Instead  of  producing  "  enervation  of  character,"  I 
maintain  that  the  assurance,  through  a  pension,  contributory 
or  otherwise,  that  one's  last  days  would  be  spent  in  peace 
and  comfort,  with  no  fear  of  poverty  and  want,  would  have 
a  strengthening  influence  npon  the  individual,  enabling  him 
to  go  to  his  daily  task  with  a  calm  and  contented  mind,  and 
would  tend  to  increase  "  the  sense  of  personal  responsibility 
and  independence." 

3.  A  pension  based  upon  either  principle  would  bind  the 
family  more  firmly  together,  for  oftentimes  the  grandparent 
with  a  small  guaranteed  pension  would  be  a  welcome  addition 
to  the  family  of  the  son  or  daughter,  when  without  this  he 
would  be  only  in  the  way. 

1  See  pp.  224  et  seq. 


1910.]  HOUSE  — No.  1400.  333 

4.  The  oiilv  areument  that  has  influenced  me  to  recommend 
the  contributory  principle  is  that  of  expediency.  Under  ex- 
isting conditions,  each  individual  provides  in  toto  for  his 
support  after  superannuation,  the  State  giving  no  direct 
assistance;  under  the  contributory  plan,  some  assistance 
would  be  granted  by  the  Commonwealth ;  while  under  a  non- 
contributory  scheme,  the  State  would  assume  the  whole 
burden.  In  other  words,  the  contributory  plan  is  intermedi- 
ate, the  present  plan  being  one  extreme  and  non-contribution 
the  other.  If  from  the  present  situation  a  change  be  made 
to  the  contributory,  there  is  no  insurmountable  objection, 
in  later  years,  to  going  to  the  extreme  of  non-contribution, 
if  that  policy  seems  wise.  On  the  other  hand,  once  the  change 
is  made  to  the  maximum  of  State  help,  an  impassable 
barrier  does  exist  to  the  return  to  the  intermediate  step  of 

contribution. 

JAMES  T.  BUCKLEY. 


I  wish  to  record  my  dissent  from  those  parts  of  the  re- 
port in  which  opinion  is  expressed  favorable  to  contributory 
pensions  and  to  compulsory  insurance. 

To  my  mind,  this  issue  between  contributory  and  non- 
contributory  pensions  turns  on  the  following  consideration: 
in  one  class  are  persons  who  find  themselves  so  placed  in  life 
that  they  have  opportunity  to  provide  for  old  age  out  of  a 
good  salary  that  ])ermits  adequate  saving,  or  through  good 
fortune  in  investment  which  has  placed  them  in  a  position 
beyond  the  reach  of  want,  or  through  interest  in  a  business 
that  brings  an  income  sufficient  to  provide  for  the  time  of 
life  when  thev  are  no  longer  able  to  hold  the  pace  set  by  the 
younger  generation ;  in  another  class  are  those  whose  posi- 
tion in  life  forces  them  to  work  for  weekly  wages,  strug- 
gling to  raise  a  family,  and  unable  to  lay  aside  anything  for 
old  age.  The  wages  of  the  working  man  to-day  will  not 
permit  him  to  live  decently  and  comfortably,  and  at  the  same 
time  lav  by  an  amount  sufficient  to  provide  for  old  age. 
When  that  period  in  life  is  reached,  the  poorhouse  or  some 


334  OLD   AGE    PENSIONS.  [Jan. 

form  of  charity  is  all  that  the  wage  earner  can  look  forward 
to  with  certainty. 

In  the  "  General  Conclusion "  are  two  paragraphs  to 
which  I  would  direct  attention,  as  follows :  — 

2.  The  enervating  influence  on  character,  especially  the  inevitable 
discouragement  of  saving.  The  thrift  habit  is  extremely  hard  to 
build  up,  and  very  easy  to  break  down.  A  non-contributory  pension 
scheme  would  weaken  the  motive  to  individual  saving,  and  would 
react  unfavorably  on  character,  by  lessening  the  sense  of  personal 
responsibility  and  independence. 

3.  The  disintegrating  effect  on  the  family.  A  non-contributory 
pension  system  would  take  away,  in  part,  the  filial  obhgation  for  the 
support  of  aged  parents,  which  is  a  main  bond  of  family  solidarity. 
It  would  strike  at  one  of  the  forces  that  have  created  the  self-sup- 
porting, self-respecting  American  family.  The  impairment  of  family 
solidarity  is  one  of  the  most  serious  consequences  to  be  apprehended 
from  an  experiment  with  non-contributory  pensions. 

I  am  convinced  that  the  fact  of  being  compelled  to  live  in 
the  poorhouse  or  dependent  upon  private  charity  in  old  age 
has  a  more  degrading  intluence  on  character  than  anything 
else,  and  should  be  eliminated  from  among  working  people. 
A  non-contributory  pension  system  would  stimulate  the  citi- 
zen and  help  to  build  up  his  character.  It  would  not  dis- 
courage thrift,  as  the  man  who  has  an  opportunity  is  only 
too  eager  to  save,  and  he  would  strive  to  save  over  the  long 
road  of  life  to  the  pensionable  age,  so  as  to  provide  for  the 
breakdowns  by  sickness  or  disease  that  every  man  fears. 

The  thrift  habit  is  hard  to  build  up  among  the  poorer  class 
of  people,  because  they  do  not  earn  money  enough  to  make 
even  a  beginninc;. 

In  the  third  paragraph,  in  relation  to  the  family  ties,  the 
facts  that  are  before  us  as  to  the  influence  of  pensions  on  the 
American  family  have  either  been  entirely  overlooked  or  mis- 
construed by  the  majority  of  the  commissioners.  We  have 
before  us  the  pension  of  the  veterans  of  the  civil  war,  their 
widows  and  orphans,  and  I  fail  to  find  the  evidence  that  war- 
rants any  statement  to  the  effect  that  this  pension  by  the 
United  States  government  has  disintegrated  the  family,  or 
lessened  ''  the  filial  obligation  for  the  support  of  the  aged 


1910.]  HOUSE  — No.  1400.  335 

parents,"  or  has  iu  any  way  impaired  the  family  solidarity. 
On  the  contrary,  the  pension  to  the  veterans  of  the  civil  war 
has  built  up  the  American  family,  and  the  filial  obligation  of 
the  family  has  been  strengthened  and  its  solidarity  main- 
tained.    An  old  person  living  with  a  married  son  or  daughter 
that  is  striving  to  bring  up  a  family  and  provide  for  them  as 
an  American  family  should  be  provided  for,  and  give  to  the 
children  a  proper  education,  can  find  a  place  for  the  veteran 
or  his  widow  who  receives  a  pension  from  the  government  in 
the  family,  because  they  do  not  take  away  from  that  family 
any  of  the  necessities  of  life,  or  stop  in  any  way  the  education 
of  the  children.     At  the  same  time,  the  independence  of  the 
veteran  or  his  widow  is  maintained,  because  they  have  enough 
to  pay  for  their  needs  at  that  period  in  life.    There  are  40,044 
government  pensioners  in  Massachusetts  at  the  present  time. 
Of  this  number,  it  is  estimated  that  27,230  are  over  65  years 
of  age.     With  this  pension  the  old  veteran  and  his  widow  are 
made  comfortable  in  their  old  age  by  living  with  their  chil- 
dren, their  friends,  or  in  homes  where  they  are  paying  their 
own  way,  and  have  a  feeling  of  independence  that  old  people 
should  have.     They  know  they  are  not  taking  away  from  the 
family  any  of  the  necessaries  of  life,  or  hampering  the  educa- 
tion of  the  children  through  any  expense  of  their  own  sup- 
port.    Any  extra  expense  in  the  workman's  family  directly 
affects  the  education  of  the  child,  compelling  him  to  leave 
school  and  seek  employment  to  help  maintain  the  family.      It 
is  said  that  there  is  no  demand  for  a  pension  at  this  time,  but 
it  should  be  borne  in  mind  that  the  large  number  that  are 
receiving  this  government  pension  have  temporarily  relieved 
the  situation;  also,  the  veteran's  ])refcrence  acts  in  the  em- 
ployment by  the  government,  national,  state,  county,  city  and 
town,  furnish  employment  for  old  persons,  and  after  the  vet- 
erans pass  away,  the  old  persons  that  follow  will  not  have 
this  preference.     A  discharge  from  employment  on  account 
of  age  will  have  a  much  more  serious  effect  upon  the  old  age 
problem.     We  should  anticipate  and  prepare  for  this  coming 
change,  and  not  wait  for  the  pressure  of  poverty  and  want 
before  we  try  to  meet  this  situation. 

As  to  the  4th  paragraph  in  the  "  General  Conclusions  "  of 


336  OLD   AGE   PENSIONS.  [Jan. 

the  commission,  it  has  already  been  decided  by  the  commis- 
sion that  if  any  pension  system  is  to  be  adopted,  it  should  be 
by  national  legislation.  That  eliminates  the  first  part  of  the 
paragraph.     The  paragraph  continues :  — 

In  this  connection  it  should  be  emphasized  that  no  argument  for 
non-contributory  pensions  can  be  built  up  on  the  contention  that 
wage  earners  as  a  class  do  not  receive  a  living  wage.  It  has  been 
shown  that  the  controversy  over  this  subject  cannot  be  settled  con- 
clusively by  available  statistics.  What  actually  constitutes  a  living 
wage,  expressed  in  dollars  and  cents,  and  what  proportion  of  the 
working  class  really  gets  a  living  wage,  must  remain  matters  of 
opinion. 

In  reference  to  the  living  wage,  it  may  be  a  matter  of 
opinion  with  those  who  are  placed  in  a  position  where  they 
are  above  want,  and  do  not  fear  poverty.  But  to  the  working 
man  it  is  not  a  matter  of  opinion  whether  there  is  a  sufficient 
wage  to  properly  maintain  a  family.  It  is  a  fact  borne  out 
by  statistics  that  living  wages  are  not  paid  at  the  present 
time.  The  twenty-second  annual  report,  "  Statistics  of  Man- 
ufacturers," 1907,  page  19,  shows  that  in  33  cities  in  Massa- 
chusetts, in  4,121  establishments,  employing  an  average  of 
both  sexes  of  380,573  workmen,  the  average  wage  paid  was 
$520.22.  There  is  no  doubt  in  my  mind  that  an  average  of 
$10  per  week  is  not  a  living  wage  in  this  State,  and  there  is 
no  opportunity  for  the  average  man  to  provide  for  old  age  on 
a  wage  as  above.  The  tables  that  are  quoted  on  "  Wages, 
Prices,  Purchasing  Power,  1890-1907,"  while  they  are  the 
only  ones  available,  do  not  show  the  actual  condition  in  1910; 
and  a  large  increase  in  the  cost  of  living  has  taken  place 
since  that  time,  with  practically  no  increase  in  wages.  The 
statistics  of  depositors  in  savings  banks  in  Massachusetts  are 
interesting  for  their  bearing  on  this  question.  In  1908 
there  were  63  depositors  per  100  population,  with  an  average 
amount  per  depositor  of  $359.  If  a  person  reached  the  age 
of  65  and  was  unable  to  do  any  more  work,  at  the  best  this 
amount  of  money  would  not  carry  him  two  years.  Then  im- 
agine the  effect  upon  a  person  who  was  thrifty  enough  to 
accumulate  this  amount  of  money  and  was  forced  to  spend 


1910.]  HOUSE  — No.  1400.  337 

it,  and,  being  without  finids  or  relatives,  was  then  forced  to 
go  to  the  poorhouse.  In  other  words.  Go  out  of  every  100 
persons  in  Massachusetts  are  less  than  two  years  from  the 
poorhouse  or  private  charity;  and  the  other  37  out  of  every 
100  are  less  than  two  weeks  from  the  same  charities. 

In  reference  to  the  statistics  on  almshouses  in  the  United 
States  and  Massachusetts,  the  need  of  poor  relief  is  recog- 
nized in  the  following  passage  of  the  report :  — 

Formerly  the  almshouse  was  practically  the  only  refuge  for  unfor- 
tunates of  every  description.  Now,  other  institutions  of  relief  pro- 
vide for  many  persons  wlio  otherwise  would  be  forced  to  become 
inmates  of  almshouses.  Tlie  number  of  hospitals,  asylums,  homes 
and  other  institutions  has  multiplied  during  the  last  generation. 

If  other  institutions  have  multiplied,  it  shows  that  the  poor- 
house has  been  recognized  as  not  being  the  proper  way  to 
handle  this  question,  and  that  poverty  has  increased  instead 
of  decreasing.  This  convinces  me  that  for  old  age  a  pension 
should  be  granted,  and  not  have  the  old  person  subject  to 
charity,  which  will  do  more  to  break  down  American  manhood 
and  womanhood  than  any  other  influence  known. 

To  my  mind,  compulsory  insurance  is  un-American,  and 
cannot  be  considered  in  any  way  as  a  solution  of  this  ques- 
tion. The  wages  of  the  workman  will  not  permit  of  any  com- 
pulsory assessment  for  insurance.  There  is  a  vast  difference 
between  this  and  compulsory  sanitary  laws,  compulsory  edu- 
cation aud  compulsory  quarantine  laws.  A  poor  man  can 
comply  with  any  of  the  above  laws  without  an  expenditure  of 
money  or  in  auy  way  reducing  his  wages,  which  he  conbl  not 
do  with  a  compulsory  insurance  law,  as  that  would  bo  e(]uiva- 
lent  to  a  reduction  in  wages.  There  is  not  sufiicient  margin 
between  the  living  expenses  and  the  wages  of  the  worknum  to 
permit  that  reduction  in  his  wage. 

It  is  verv  easy  for  those  who  can  provide  for  old  age  to 
say  to  others,  in  the  following  language,  which  is  found  in  the 
"  General  ronclusions  "  :  — 

That  is.  the  obligation  to  jjrovide  for  old  age  is  recognized  as  rest- 
ing upon  the  individual,  and  not  upon  tiie  State.     It  may  be  that 


338  OLD   AGE    PENSIONS.  [Jan. 

eventually  the  State  will  undertake  to  enforce  this  obligation  upon 
the  individual  by  law.  The  State  may,  in  the  interest  of  all,  say  to 
the  individual :  "  You  shall  provide  for  your  old  age  through  saving- 
made  easy  by  a  system  of  insurance  established  by  government,  in 
order  that  the  general  welfare  may  not  be  disturbed  by  your  coming 
to  the  State  for  support  in  your  old  age." 

It  is  compulsory  now  upon  our  citizens  to  make  a  living, 
but  if  they  wish  to  become  criminals,  the  State  will  support 
them.  But  the  man  who  wants  to  remain  a  law-abiding  citi- 
zen and  try  to  supi^ort  his  family  is  compelled  to  provide  for 
old  age,  when  the  facts  are  that  he  is  unable  at  the  present 
time  to  secure  many  of  the  comforts  of  life.  Every  law- 
abiding  citizen  has  rendered  to  his  country  some  service, 
which  entitles  him  to  look  forward  to  a  pension  given  in  re- 
turn ;  and  as  at  present  the  premium  placed  upon  crime  and 
poverty  is  un-American,  something  should  be  done  to  provide 
for  the  law-abiding,  self-supporting  citizen. 

I  do  not  believe  this  is  a  question  for  legislation  by  the 
State,  but  that  legislation  on  this  subject  should  be  uniform, 
because  the  question  of  old  age  pensions  is  essentially  a  na- 
tional rather  than  a  State  issue.  Accordingly,  I  favor  the 
enactment  by  the  national  Congress  of  a  non-contributory 
pension  measure,  such  as  that  proposed  in  the  bill  introduced 
by  Congressman  Wilson  of  Pennsylvania. 

Holding  this  opinion,  I  wouhl  urge  upon  the  General 
Court  to  pass  a  resolution  directing  the  attention  of  the  na- 
tional Congress  to  this  subject  of  pension  legislation,  and  fur- 
ther urffins;  the  enactment  of  the  bill  now  before  that  body. 

I  therefore  respectfully  request  the  General  Court  to  adopt 
the  following  resolution :  — 

Resolution  relating  to  the  Subject  of  Old  Age  Pension  Legis- 
lation BY  the  National  Congress. 

Resolved,  That  the  General  Court  of  the  Commonwealth  of  Massa- 
chusetts favors  such  action  by  the  Congress  of  the  United  States 
as  will  provide  for  the  establishment  of  a  national  system  of  old 
age  pensions,  and  accordingly  requests  the  Senators  and  the  Repre- 
sentatives of  this  Commonwealth  to  support  Bill  No.  14494,  entitled 
"  An  Act  to  organize  an  Army  Cori^s,  prescribe  Qualifications  for 


1910.]  HOUSE  — No.  1400.  339 

Enlistment  therein,  define  the  Duties  and  tix  th-e  Compensation  and 
Term  of  Enlistment  of  Privates,  and  for  Other  Purposes." 

Besolred,  That  copies  of  this  resDJution  shall  be  transmiUed  by 
the  Secretary  of  this  Commonwealth,  to  the  presiding'  oltieers  of 
both  branches  of  Congress,  and  to  the  Senators  and  Representatives 
of  this  Commonwealth. 

Attached  to  this  statement  is  a  copy  of  House  Bill  No. 
14494,  and  brief  submitted  bj  Congressman  Wilson  in  sup- 
port of  said  bill. 

ARTHUR  M.  HUDDELL. 


Sixty-first  Congress,  second  Session.  H.  R.  Xo.  14494.  In  the  House  of  Rep- 
resentatives, December  14,  1909,  Mr.  Wilson  of  Pennsylvania  introduced 
the  following  bill,  which  was  referred  to  the  Committee  on  Militarj--  Affairs 
and  ordered  to  be  printed 

Ax  Act  to  orgaxize  ax  Army  Corps,  prescribe  Qualificatioxs 

FOR     EXLISTMEXT    THEREIN,    DEFINE    THE    DUTIES    AXD    FIX    THE 
COMPEXSATIOX    AXD     Ter:*!    OF     EXLISTMEXT    OF    PRIVATES,    AND 

FOR  Other  Purposes. 

Be  it  enacted,  etc.  That  immediately  after  the  passage  of  this 
act,  an  Army  Corps  shall  be  organized  in  the  Department  of  War, 
under  the  direction  of  the  President,  to  be  kn(_)wn  as  the  Old  Age 
Home  Guard  of  the  United  States  Army. 

Section  2.  The  Old  Age  Home  Guard  of  the  United  States 
shall  be  composed  of  persons  not  less  than  sixty-five  years  of  age. 

Section  3.  Any  person  who  is  sixty-five  years  of  age,  or  up- 
wards, and  who  has  been  a  resident  of  the  United  States  twenry- 
five  consecutive  years,  and  a  citizen  of  the  United  States  fifteen 
consecutive  years  next  preceding  the  date  of  application,  and  who 
is  not  possessed  of  property  amounting  to  more  than  fifteen  hun- 
dred dollars  in  value,  free  of  all  incumbrances,  or  an  income  of 
more  than  two  hundred  and  forty  dollars  per  annum,  and  who  has 
not  sequestered,  or  otherwise  disposed  of  property  or  income  for  the 
purpose  of  qualifying  for  enlistment  as  hereinafter  provided,  may 
make  application,  in  writing,  to  the  Secretary  of  War,  for  enlist- 
ment in  the  Old  Age  Home  Guard  of  the  United  States  Army,  and 
it  shall  be  the  duty  of  the  Secretary  of  War  to  enlist  and  enroll 
such  applicant,  for  the  term  of  his  or  her  life,  as  a  private  in 
the  Old  Age  Home  Guard  of  the  United  States  Army  without  regard 
to  the  physical  condition  of  the  applicant,  provided  that  persons 
related  as  husband  and  wife  shall  not  both  be  eligible  for  enlist- 
ment, enrollment  and  service  therein  at  the  same  time,  and  in  case 


340  OLD   AGE   PENSIONS.  [Jan. 

of  dispute  as  to  Avbether  husband  or  Avife  shall  be  enlisted  and 
enrolled,  as  herein  provided,  the  question  shall  be  decided  by  the 
Secretary  of  AYar,  by  and  with  the  approval  of  the  President. 

Section  4.  The  pay  of  a  private  in  the  Old  Age  Home  Guard 
of  the  United  States  Army  shall  be  one  hundred  and  twenty  dollars 
per  annum,  to  be  paid  in  quarterly  installments,  as  pensions  are 
now  by  law  paid,  provided,  that  ten  dollars  per  annum  shall  be 
deducted  from  the  pay  of  each  private,  and  retained  in  the  treasury 
of  the  United  States,  for  every  one  hundred  dollars'  Avorth  of  prop- 
erty in  excess  of  three  hundred  dollars,  and  for  every  ten  dollars 
per  annum  income  in  excess  of  one  hundred  and  tAventy  dollars, 
possessed  by  such  private. 

Section  5.  Arms  and  ammunition  shall  be  furnished  to  privates 
in  the  Old  Age  Home  Guard  of  the  United  States  Army  at  the 
discretion  of  the  Secretary  of  "War,  but  no  sustenance  shall  be 
furnished  to  them  except  the  pay  herein   provided. 

Section  6.  No  private,  or  applicant  for  enlistment  as  private, 
shall  be  I'equired  to  leave  his  or  her  home  for  the  purpose  of 
enlistment,  enrollment  or  serA'ice  in  the  Old  Age  Home  Guard  of 
the  United  States  Army,  nor  shall  they  be  requii-ed  to  assemble, 
drill  or  perform  any  of  the  other  manoeuvres,  nor  be  subject  to 
any  of  the  regulations  of  the  United  States  Army,  except  as  herein 
provided. 

Section  7.  PriA-ates  in  the  Old  Age  Home  Guard  of  the  United 
States  Army  shall  be  required  to  report  annually,  in  writing,  to  the 
Secretary  of  "War,  on  blanks  furnished  by  him  for  the  purpose, 
the  conditions  of  military  and  patriotic  sentiment  in  the  community 
Avhere  such  private  lives,  but  no  private  shall  be  discharged,  dis- 
ciplined, or  otherAvise  punished  for  failure  to  make  such  report. 

Section.  8.  The  number  of  persons  enlisted  in  the  Old  Age 
Home  Guard  of  the  United  States  Army  shall  be  in  addition  to 
the  number  of  officers  and  privates  noAV  required  by  hiAv  in  the 
United  States  Army. 

Section  9.  All  acts  and  parts  of  acts  inconsistent  Avith  the  pro- 
A'isions  of  this  act  are  hereby  repealed. 

In  making  his  report  to  the  executive  committee  of  the 
American  Federation  of  Labor,  Congressman  Wilson  sub- 
mitted the  following  brief  in  support  of  same :  — 

Blossburg,   Pa.,  June  11,  1909. 

To  the  Executive  Council  of  ilie  American  Federation  of  Labor. 

Gentlemen  :  —  I  am  submitting  to  you  hereAvith,  for  your  con- 
sideration and  criticism,  a  bill  Avhieh  I  have  prepared  for  presenta- 


1910.]  HOUSE  — No.  1400.  341 

tion  to  Congress,  on  the  subject  of  old  age  pensions.  In  doing  so. 
I  desire  to  offei'  a  few  observations  on  the  genei'al  jtrinoiples  in- 
volved in  old  age  pensions,  and  iiaiticularly  on  the  provisions  of 
this  bill. 

Every  form  of  government  has  its  limitations.  That  is  particularly 
true  of  demoei'acies  having-  written  constitutions.  But  when,  in 
addition  to  the  general  limitations  provided  by  the  founders  or 
builders  of  constitutional  governments,  for  the  pi'otection  of  citizens 
in  their  natural,  individual  and  collective  rights,  you  have  a  form 
of  government  wliich  has  derived  all  its  powers  from  wi'itten  eon- 
cessions  made  by  a  number  of  ditifei'ent  States,  each  claiming  absolute 
sovereignty  within  its  own  boundaries,  except  in  those  things  which 
it  has  specifically  conceded  in  writing  to  the  general  government,  you 
are  confronted  by  a  system  of  limitations  which  it  is  extremely 
difficult  to  overcome,  when  seeking  legislation  of  a  nature  not  in- 
cluded in  the  special  grant  of  powers  by  the  several  States  to  the 
general  government. 

That  is  the  form  of  the  federal  government  of  the  United  States. 
Yet  its  purj^ose  is  broadly  set  forth  in  the  preamble  to  the  consti- 
tution. It  says :  "  We,  the  people  of  the  United  States,  in  order  to 
form  a  more  perfect  union,  establish  justice,  insure  domestic  tran- 
quility, provide  for  the  common  defense,  promote  the  general  Avelfare, 
and  secure  the  blessings  of  liberty  to  ourselves  and  our  posterity, 
do  ordain  and  establish  this  constitution  for  the  United  States  of 
Amei'ica.'' 

Thus  it  will  be  observed  that  two  out  of  the  six  specific  purposes 
of  the  government  are  the  establishment  of  justice  and  the  pro- 
motion of  the  general  welfare,  both  of  which  purposes  are  included 
in  the  desire  for  the  establishment  of  an  old  age  pension. 

Xo  one  will  for  a  moment  contend  that  any  tille  to  property 
exists  anywhere  except  by  virtue  of  the  laws  enacted  l)y  government, 
and  the  only  method  by  which  tho.se  titles  are  successfully  defended 
is  through  the  government;  that  is,  through  the  power  of  the  people 
collectively.  Every  person  who  owns  land,  tools  or  other  machinery, 
the  products  of  labor  or  other  accumulations,  holds  his  title  to 
them  through  the  law,  enforced  by  the  strong  arm  of  the  government. 
The  law  jire-scribes  methods  by  which  ]^ro))erty  may  be  secured  and 
how  it  can  be  retained.  It  gives  and  defends  the  title  to  all  real 
estate,  and  acts  as  the  arbiter  in  all  disputes  growing  out  of  that 
title  or  the  possession  of  personal  property.  Every  corporation 
is  a  law-created,  law-protected  body,  that  could  have  no  existence 
but  for  the  law,  and  no  power  or  property  but  for  the  government. 
No  contract  mutually  entered  into  can  be  made  binding  upon  the 
contracting  parties  except  by  the  power  of  the  people  collectively, 
expressed    and    enfoi'ced    through    their    laws.      Wealth    cannot    be 


342  OLD   AGE    PENSIONS.  [Jan. 

aceumnlated  and  held  by  any  individual  ov  corporation  in  large 
quantities  Avithont  the  fostering  care  of  the  law  and  government. 
Destroy  both,  abolish  all  law  and  all  government,  and  immediately 
property  rights  cease  to  exist.  The  only  title  would  be  the  strength 
and  cumiing  of  the  individual.     We  would  return  to  the 

Good  old  plan, 
To  let  him  take  who  has  the  power, 
And  let  him  keep  who  can. 

It  follows,  then,  that  he  who  has  the  greatest  amount  of  wealth 
receives  the  greatest  amount  of  protection  from  law  and  govern- 
ment. It  protects  him  in  the  possession  and  enjoyment  of  it  in  life, 
and  in  conveying  it  to  his  heirs  at  death.  The  man  who  possesses 
properly  has  a  decided  advantage  in  life  over  the  man  who  pos- 
sesses none.  In  order  to  produce  or  earn  a  livelihood,  people  must 
have  the  use  of  property  upon  which  to  work.  The  man  who  has 
the  property  can  dictate  the  terms  upon  which  he  will  permit  another 
to  use  it.  The  law  protects  him  in  that  right,  consequently  he  has 
a  law-created  and  law-protected  advantage  over  the  Avorkman  who 
is  without  property  upon  which  to  work.  He  will  not  let  the  latter 
work  on  any  other  terms  than  those  he  considers  profitable.  During 
his  entire  lifetime  the  propertyless  workman  must  continue  to  give  a 
share  of  what  he  produces  in  the  form  of  profits  to  his  employer  in 
return  for  the  opportunity  of  earning  a  living.  The  compensation  re- 
ceived seldom  exceeds  the  household  requirements,  "  economically  ad- 
ministered." When  the  time  comes  that  the  physical  and  mental 
faculties  begin  to  decline,  when  his  powers  of  brain  and  brawn  can 
no  longer  be  profitably  employed,  no  means  have  been  accumulated 
by  him  with  which  to  sustain  existence.  Surely,  then,  society  at 
large,  to  which  he  has  given  a  lifetime  of  labor,  Avhich  protects  his 
employer  and  others  in  their  title  to  property,  should  protect  him  in 
his  right  and  title  to  a  comfortable  existence  during  the  remainder 
of  his  days. 

The  State  at  the  present  time  recognizes  a  part  of  its  duty  to 
the  old,  the  sick,  the  injured  and  the  incompetent,  as  is  shown  by 
the  establishment  of  poorhouses  and  hospitals.  But  our  poorhouses 
are  organized  and  maintained  on  the  principle  of  a  charity,  rather 
than  an  obligation  Avhich  society  owes  to  its  superannuated  workers. 
The  application  of  the  principles  of  charity  in  that  case  is  unjust. 
Society,  in  carrying  out  its  own  ideas  of  economic  law,  has  left 
them,  after  a  lifetime  of  hard  labor,  completely  stranded,  like  ship- 
wrecked mariners  on  the  arctic  shores  of  time.  It  owes  them  a 
living,  and  should  pay  its  debts. 

We  cannot  contemplate  the  closing  scenes  in  the  life  of  a  self- 
respecting  workingman   without   feeling   some   of   the   anguish   that 


1910.  j  HOUSE  — No.  1400.  343 

tears  his  soul.  —  tLe  stnit>'i>le  Avith  poverty  on  the  one  hand,  and  the 
piide  that  cannot  bend  t»)  accept  charity  on  the  other. 

Then  we  feel  the  f orcef ulness  of  the  words  of  Burns :  — 

Look  not  alouc  on  youthful  prime, 
On  manhood's  active  might ; 
Man  then  is  useful  to  his  kind, 
Supported  in  his  right. 
But  see  him  on  the  edge  of  life, 
f  With  cares  and  sorrows  worn, 

Then  age  and  want,  oh,  ill-matched  pair, 
Show  man  was  made  to  mourn. 

But  even  those  that  ajiree  that  a  pen.sion  should  of  right  be  given 
to  those  who  are  too  old  to  continue  in  active  service,  and  who  are 
without  means  to  maintain  themselves,  differ  as  to  whether  or  not 
men  who  have  been  convicted  of  crime  should  be  included  in  the 
grant.  The  violation  of  the  law  may  or  may  not  involve  moral 
turpitude.  But  in  either  event  the  primary  object  of  imprisonment 
is  not  the  welfare  of  the  convict,  but  rather  the  protection  of  the 
community.  And  if  society,  in  order  to  protect  itself,  deems  it 
necessary  to  deprive  one  of  its  number  of  his  liberty,  thereby  pre- 
venting him  from  providing  for  his  did  age.  it  is  cruel  to  turn 
him  adrift  in  his  senility,  to  gather  his  living,  like  a  stray  dog, 
at  the  ash  heap. 

It  .is  difTlcult  to  devise  a  direct  method  by  which  old  age  pensions 
can  be  granted  by  the  federal  government.  But  if  part  of  the 
purpose  of  the  government  is  to  establish  justice  and  promote  the 
general  welfare,  then  any  method  of  providing  old  age  pensions 
which  the  constitution  will  permit  should  be  utilized.  The  federal 
constitution  expressly  specifies  that  Congress  shall  have  the  power 
"  to  raise  and  support  armies."  It  has  exercised  that  power  from 
the  beginning  without  question.  It  has  on  various  occasions  specified 
the  minimum  age  Hmil  ot  enlistment.  It  can  make  the  limit  either 
high  or  low.  It  can  make  it  high  for  one  branch  of  the  service  and 
low  for  aiH)ther,  and  can  enumerate  the  duties  to  be  performed, 
making  them  either  light  oi-  heavy,  fixing  the  compensation  in  ac- 
cordance with   its  own  judgment. 

It  is  ni)on  tliat  principle  of  constitutional  law  that  the  bill  wliicli 
T  have  presented  for  your  consideration  has  been  based.  There  are 
other  methods  by  which  the  same  result  may  be  attained.  The 
.same  object  might  be  leached  by  the  enactment  of  a  federal  law 
granting  a  pension  to  all  men,  above  a  certain  age,  wlio  have  been 
engaged  in  interstate  and  foreign  commerce,  and  to  government 
employees,  and  then  secure  direct  pension  hiws  in  the  different 
States.  There  can  be  no  question  of  the  right  of  the  government 
to  grant  a  pension  to  its  own  employees  if  it  so  desires;  but  when 
it    comes   to   dealing   witli   interstate   commerce,   another   problem   is 


344  OLD   AGE   PENSIONS.  [Jan.  1910. 

presented.  If  I  correctly  understand  the  decision  of  the  Supreme 
Court  in  the  employers'  liability  law  ease,  a  railway  worker  may  be 
engaged,  within  a  State,  in  switching  or  hauling  a  car  of  freight 
destined  for  another  State,  and  yet  if  he  does  not  cross  the  State 
line  in  the  performance  of  his  labor,  he  is  not  engaged  in  interstate 
commerce.  If  that  interpretation  is  correct,  it  would  materially 
reduce  the  number  of  persons  that  could  erme  within  the  scope  of 
the  law.  At  this  point  another  difficulty  presents  itself.  The  men 
it  is  proposed  to  pension  would  no  longer  be  engaged  in  interstate 
commerce ;  they  would  be  retired.  Would  the  Supreme  Court  uphold 
the  right  of  the  government  to  pension  men  who  were  not  actually 
engaged  in  inteistate  commerce  during  the  time  for  which  the 
pension  was  allowed,  under  the  terms  of  the  interstate  commerce 
■clause  of  the  constitution"?  There  is  at  least  an  element  of  doubt 
in  it.  The  ditheulty  of  securing  favorable  legislation  in  46  separate 
States  is  so  apparent  that  it  only  has  to  be  mentioned  to  be  under- 
stood. 

The  constitution  might  be  amended  by  giving  additional  powers 
to  the  federal  government.  But  with  the  attempt  to  amend  it  along 
those  lines,  the  whole  question  of  States'  rights  would  be  raised, 
which,  together  with  the  opi:)Osition  to  the  proposition  itself  that 
it  will  inevitably  receive  from  the  selfish  jjossessors  of  wealth, 
would  make  the  task  an  almost  hopeless  one. 

One  of  the  grave  problems  in  connection  with  the  establishment 
of  old  age  pensions  is  the  raising  of  revenue  to  meet  the  payments. 
The  same  principle  that  makes  it  a  duty  of  the  government  to  pro- 
vide for  its  superannuated  workers  would  require  that  the  means 
to  do  so  should  be  raised  by  a  tax  on  property,  incomes,  bequests 
and  inheritances,  so  far  as  it  is  within  the  power  of  the  federal 
government. 

From  every  point  of  view,  the  method  herewith  proposed  seems 
to  be  the  most  feasible.  It  places  the  pensioner  in  the  direct  em- 
ployment of  the  government ;  it  enlists  him  in  the  army  of  the 
United  States  under  the  direction  of  the  President,  who  is  the 
Commander-in-Chief  of  the  Army  and  Navy;  it  enumerates  the 
■duties  to  be  performed,  limits  the  punishment  for  failure  to  per- 
form them,  and  stipulates  the  compensation  to  be  received  for  the 
; service  required. 

I  have  not  as  j'et  introduced  the  measure  in  Congress,  but  will 
: await  Avith  interest  your  favorable  or  unfavorable  criticism,  or  any 
;amendments  you  may  have  to  suggest. 

Fraternally  yours, 

W.  B.  WILSON. 


APPENDIX 


Appendix  A. 


DRAFTS  OF  BILLS. 


Ax    Act    to    provide    for    Compulsory    Instruction    in    Thrift 
IN  THE  Public  Schools  of  the  Commonwealth. 

Be  it  enacted,  etc.,  as  folio ics: 

Section  one  of  ehaptei-  forty-two  of  the  Revised  Laws  of  Massa- 
chusetts, relating  to  the  subjects  that  shall  be  taught  in  the  public 
schools,  is  hereby  amended  by  inserting  in  the  twentieth  line  the 
word  "  thrift,"  after  the  word  "  ethics." 


An  Act  to  establish  the  Massachusetts  Commission  on   Old 

Age  Insurance  and  Pensions. 
Be  it  enacted,  etc.,  as  follows: 

Section  1.  The  governor,  by  and  with  the  consent  of  the  coun- 
cil, shall  appoint  a  commission  of  five  persons,  to  be  known  as  the 
Commission  on  Old  Age  Insurance  and  Pensions,  one  member  of 
which  shall  be  appointed  for  a  term  of  five  years,  one  for  a  term 
of  four  years,  one  for  a  term  of  three  years,  one  for  a  term  of  two 
years  and  one  for  a  term  of  one  year.  Upon  the  expiration  of 
the  term  of  any  member,  a  successor  for  a  tei-m  of  five  years  shall 
be  appointed.  One  member  shall  be  a  representative  of  employers 
and  another  member  shall  be  a  representative  of  employees.  The 
commission  shall  employ  a  secretary  as  its  executive  officer,  who 
shall  not  be  a  member  of  the  commission,  and  may  engage  such 
further  assistance  as  may  be  necessary  for  the  proper  performance 
of  its  duties.  Tlie  members  of  the  commission  shall  receive  no  com- 
pensation for  tlu'ir  services.  l)ut  necessary  expenses  for  travelling, 
stationery  and  other  purposes  shall  be  paid  out  of  the  treasury  of 
the  commonwealth,  subject  to  the  approval  of  the  governor  and 
council. 

Section  2.  The  commission  shall  act  as  a  bureau  of  information 
and  assistance  for  employers  and  employees,  for  associations  of 
emploj-ers   and   employees,   and   for  municipalities   and   counties  in 


348  OLD   AGE   PENSIONS.  [Jan. 

this  commonwealth,  with  a  view  to  aiding-  and  advising  them  re- 
garding the  establishment  of  systems  of  old  age  pensions,  insurance 
or  annuities.  In  rendering  this  service  the  commission  may  form- 
ulate plans  and  superintend  their  establishment  in  eo-operation  with 
the  parties  concerned.  The  commission  shall  also  make  such  in- 
vestigation regarding  the  operation  of  pension,  insurance  and 
annuity  systems  as  it  may  deem  advisable. 

Section  3.  The  commission  shall  report  annually  to  the  legisla- 
ture on  or  before  the  second  Wednesday  in  January.  The  report 
shall  set  forth  the  work  done  by  the  commission  during  the  preced- 
ing year  in  accordance  with  the  instructions  of  this  act,  and  shall 
present  such  recommendations  for  legislation  on  the  subject  of  old 
age  insurance,  pensions  or  annuities  as  the  commission  may  deem 
advisable.  The  report  shall  also  give  a  properly  tabulated  state- 
ment of  the  expenditures  of  the  commission,  and  an  estimate  of  the 
amount  required  for  the  purposes  of  the  commission  during  the 
coming  year. 

Section  4.     This  act  shall  take  effect  upon  its  i^assage. 


An  Act  to  authorize  Employers  and  Employees  to  Establish 
Co-operative  Retirement,  Annuity  or  Pension  Systems. 

Be  it  enacted,  etc.,  as  follows: 

Section  1.  Employees,  officers  and  agents  of  any  corporation, 
firm  or  individual,  and  the  corporation,  firm  or  individual  by  which 
they  are  employed,  are  hereby  authorized  to  form  an  association 
for  the  purpose  of  providing  annuities,  pensions  or  endowments  for 
employees  retiring  from  their  employment  on  account  of  age,  under 
a  system  by  which  the  participating  employees  contribute  to  the 
funds  of  the  association  a  percentage  or  portion  of  their  salaries  or 
wages  as  fixed  by  the  by-laws  of  the  association,  to  be  deducted  by 
the  employer  and  paid  to  the  association,  and  the  emijloyer  eon- 
tributes  to  the  funds  of  the  association  in  the  manner  and  to  the 
extent  fixed  in  said  by-laws.  The  funds  so  provided  shall  be  held 
by  trustees  indejiendently  of  other  funds  of  the  employer,  for  the 
Ijurchase  or  payment  of  annuities,  pensions  or  endowments  to  par- 
ticipating' employees  upon  their  retirement  from  service  on  account 
of  age,  and  for  the  payments  to  the  representatives  or  appointees 
of  any  participator  dying  before  reaching  the  age  of  retirement.  An 
association  formed  under  the  authority  of  this  act  shall  not  be  sub- 
ject to  the  provisions  of  chapter  five  hundred  and  seventy-six  of  the 
acts  of  nineteen  hundred  and  seven,  or  to  such  other  jDrovisions  of 
law  as  relate  to  insurance  companies  or  associations,  except  as  herein 
provided. 


1910.]  HOUSE  — No.  1400.  349 

Section  2.  The  by-laws  of  any  such  association  shall  be  ap- 
proved by  tlie  insurance  commissioner,  and  shall  prescribe  the  man- 
ner in  wliich  and  the  officers  and  agents  by  whom  the  purpose  of  the 
association  may  be  carried  out  and  the  manner  in  wiiich  its  funds 
may  be  invested  and  paid  out.  Such  association  shall  be  deemed  to 
be  formed  when  its  by-laws  have  been  approved  and  agreed  to  by 
the  employer  and  by  the  employees  by  vote  of  two-thirds  of  all 
employees  present  and  voting  at  a  meeting  called  by  the  employer 
for  the  puri)ose,  and  have  been  apj^roved  by  said  commissioner. 
Such  association  shall  annually,  on  or  before  the  first  day  of  Feb- 
ruary, report  to  the  insurance  commissioner  such  statements  of  its 
membershiiJ  and  financial  transactions  for  the  year  ending  on  the 
preceding  thirty-first  day  of  December  as  the  commissioner  may 
consider  necessary  to  show  its  business  and  standing.  Said  commis- 
sioner may  verify  such  statement  by  an  examination  of  the  books 
and  papers  of  the  corporation;  and  whoever,  having  charge  or  cus- 
tody of  said  books  and  papers,  neglects  to  comply  with  the  provisions 
of  this  section  shall  be  punished  hj  a  fine  of  not  more  than  five 
hundred  dollars. 

Sectiox  3.  The  property  of  such  association,  and  the  portion  of 
the  wages  or  salary  of  an  emjiloyee  deducted  or  to  be  deducted  under 
this  act,  the  right  of  an  employee  to  an  annuity,  pension  or  endow- 
ment, and  all  his  rights  in  the  funds  of  the  association,  shall  be 
exempted  from  taxation  and  from  the  operation  of  any  law  relating 
to  banki'uptcy  or  insolvency,  and  shall  not  be  liable  to  attachment 
by  trustee  jjrocess  or  be  liable  to  be  taken  on  execution  or  on  any 
other  process  legal  or  equitable  to  satisfy  any  debt  or  liability  of  the 
employer  or  of  any  member  of  the  association. 

Section  4.     This  act  shall  take  effect  upon  its  passage. 


Ax  Act  to  authorize  the  Cities  and  Towns  of  this  Common- 
wealth TO  establish  Retirement  Systems  for  their  Em- 
ployees. 

Be  it  enacted,  etc.,  as  folloics: 

Section  1.     In  this  act,  unless  the  context  otherwise  requires:  — 
(o)   The  words  "city  council  "  mean  the  legislative  branch  of  the 
city  government,  whether  consisting  of  one  chamber  or  two. 

( h )   The  words  "  retirement  system  "  mean  the  arrangements  pro- 
vided in  this  act  for  the  payment  of  annuities  and  pensions. 

(c)  The  word  "  annuities  "  means  the  payments  for  life  derived 
from  money  contributed  by  the  employees. 

(d)  The  word  "pensions"  means  the  payments  for  life  derived 
from  money  contributed  by  the  city  or  the  town. 


350  OLD   AGE   PENSIONS.  [Jan. 

(e)  The  words  "  regular  interest  "  mean  interest  at  three  per  cent, 
per  annum  compounded  semi-annually  on  the  last  days  of  January 
and  July,  and  reckoned  for  full  three  and  six  months  periods  only. 

(/)  The  woVds  "  continuous  service  "  mean  uninterrupted  employ- 
ment, with  this  exception:  a  lay-off  on  account  of  illness  or  reduc- 
tion of  force;  and  a  leave  of  absence,  suspension  or  dismissal  fol- 
loAved  by  reinstatement  within  one  year  shall  not  be  considered  as 
breaking  the  continuity  of  service. 

ESTABLISHMENT    OF    RETIREMENT    SYSTEM. 

Section  2.  Anj'  city  or  town  in  this  commonwealth  may  establish 
a  retirement  system  for  its  employees  by  accepting  the  provisions  of 
this  act  in  the  manner  hereinafter  prescribed,  as  follows :  In  the  case 
of  a  city,  whenever  a  vote  to  accept  the  provisions  of  the  act  shall 
have  been  duly  passed  by  the  city  council,  the  question  of  acceptance 
shall  then  be  submitted  to  the  voters  of  the  city  at  the  next  municipal 
election.  The  vote  shall  be  in  answer  to  the  question,  to  be  placed 
upon  the  ballot:  Shall  an  act  passed  by  the  general  court  in  the 
year  ,  entitled  "  An  Act  authorizing  the  cities  and  the  towns  of 
this  commonwealth  to  establish  retirement  systems  for  their  employ- 
ees," be  accepted  ?  In  the  case  of  a  town,  whenever  a  vote  to  accept 
the  provisions  of  the  act  shall  have  been  duly  passed  by  the  board 
of  selectmen,  the  question  of  acceptance  shall  then  be  submitted  to 
the  voters  of  the  town  at  the  next  town  meeting.  If  a  majority  of 
the  voters  voting  on  the  question  at  the  city  election  or  at  the  town 
meeting  shall  vote  in  the  affirmative,  this  act  shall  take  effect  in  such 
city  or  town  as  hereinafter  provided. 

A  copy  of  the  vote  of  the  city  council  or  of  the  board  of  selectmen, 
certified  by  the  city  clerk  or  by  the  town  clerk,  and  a  copy  of  the 
vote  at  the  city  election  or  at  the  town  meeting,  sworn  to  by  the 
local  election  commissioners  or  the  officers  corresponding  thereto, 
shall,  within  thirty  days  respectively  after  the  date  of  the  latter 
vote,  be  filed  in  the  office  of  the  insurance  commissioner  of  this  com- 
monwealth. The  latter  shall  forthwith  issue  a  certificate  that  the  re- 
tirement system  is  declared  established  in  said  city  or  town,  to  become 
operative  on  the  first  day  of  February  or  the  first  day  of  August 
following  the  expiration  of  three  months  after  the  date  of  such 
certificate. 

THE   RETIREMENT    ASSOCIATION. 

Section  3.  Whenever  a  city  or  town  shall  have  voted  to  estab- 
lish a  retirement  system  under  the  provisions  of  section  two,  a 
retirement  association  shall  be  organized  as  follows :  — 

(1)  All  employees  of  the  city  or  town,  on  the  date  when  the 
retirement  system  is  declared  established  by  the  issue  of  the  certifi- 


1910.]  HOUSE  — No.  1400.  351 

cate.  as  provided  in  section  two,  may  become  members  of  the  associa- 
tion. On  the  expiration  of  sixty  days  from  said  date  every  such 
empk^j'ee  shall  be  considered  to  have  elected  to  become,  and  shall 
thereby  become,  a  member,  unless  he  shall  have,  within  that  period, 
sent  notice  in  writing'  to  the  local  election  commissioners  or  the  offi- 
cers corresponding  thereto  that  he  does  not  wish  to  join  the  associa- 
tion. 

(2)  All  employees  who  enter  the  service  of  the  city  or  town  after 
the  date  when  the  retirement  system  is  declared  established  by  the 
issue  of  the  certificate,  as  provided  in  section  two,  except  persons 
who  have  already  passed  the  age  of  fifty-five  years,  shall  upon  com- 
pleting thirty  days  of  service  become  thereby  members  of  the  asso- 
ciation. Persons  over  fifty-five  years  of  age  who  enter  the  service 
of  the  city  or  town  after  the  establishment  of  the  retirement  system 
shall  not  be  allowed  to  become  members  of  the  association,  and  no 
such  employee  shall  remain  in  the  service  of  the  city  or  town  after 
reaching  the  age  of  seventy  years. 

(3)  Xo  officer  elected  by  popular  vote  may  become  a  member  of 
the  association,  nor  any  employee  who  is  or  will  be  entitled  to  a 
pension  from  the  city  or  town  for  any  reason  other  than  membership 
in  the  association. 

(4)  Any  member  who  reaches  the  age  of  sixty  years  and  who 
has  been  in  the  continuous  service  of  the  city  or  town  for  a  period 
of  fifteen  years  immediately  preceding  may  retire  or  may  be  retired 
by  the  board  of  retirement,  and  any  member  who  reaches  the  age  of 
seventy  must  so  retire. 

(5)  Any  member  who  has  completed  a  period  of  thirty-five  years 
of  continuous  sen^ice  may  retire,  or  may  be  retired  at  any  age  by 
the  board  of  retirement  if  such  action  be  deemed  advisable  for  the 
good  of  the  service. 

(6)  Any  member  who  becomes  permanently  disabled  in  the  ser- 
vice of  the  city  or  town  shall  be  retired  by  the  board  of  retirement. 

THE  BOARD  OF  RETIREMENT. 

Section  4.  (1)  The  management  of  the  retirement  system  is 
hereby  vested  in  the  board  of  retirement,  consisting  of  three  mem- 
bers, one  of  whom  shall  be  the  city  or  town  treasurer;  the  second 
member  shall  be  a  member  of  the  association  elected  by  the  latter 
within  thirty  days  after  the  date  when  the  retirement  system  is  de- 
clared esta])lished  by  the  issue  of  the  certificate,  as  jirovided  under 
section  two,  in  a  manner  to  be  determined  by  the  local  election 
commissioners  or  the  officers  corresponding  thereto;  the  third  mem- 
ber shall  be  an  employee  of  the  city  or  town,  chosen  by  the  other 
two  members.    In  case  of  the  failure  of  the  latter  to  choose  the  third 


352  OLD   AGE   PENSIONS.  [Jan. 

member  within  thirty  days  after  the  election  of  the  second  member, 
the  mayor  or  the  chairman  of  the  board  of  selectmen  shall  appoint 
such  third  member.  The  first  person  so  chosen  or  appointed  as  third 
member  shall  serve  for  two  years;  otherwise  and  thereafter  the  term 
of  office  of  the  two  elected  members  shall  be  three  years.  On  a  va- 
cancy occurring  in  the  board  for  any  cause  or  on  the  expiration  of 
the  term  of  office  of  any  member,  a  successor  of  the  person  whose 
place  has  become  vacant  or  whose  term  has  expired  shall  be  chosen  in 
the  same  manner  as  was  his  predecessor. 

(2)  The  members  of  the  board  of  retirement  shall  serve  without 
compensation ;  but  they  shall  be  reimbursed  out  of  the  retirement 
fund  for  any  expense  or  loss  of  salary  or  Avages  which  they  may 
have  incurred  through  service  on  the  board. 

(3)  The  city  or  town  treasurer  shall  have  charge  and  control  of 
the  funds  of  the  system,  subject  to  the  approval  of  the  board  of 
retirement,  and  shall  invest  and  reinvest  the  same,  and  may  from 
time  to  time  sell  any  securities  held  by  him  and  invest  and  reinvest 
the  proceeds  therefrom,  and  any  and  all  unapproj^riated  income  of 
said  funds:  provided,  Jiowever,  that  all  funds  received  by  him  not 
required  for  current  disbursements  shall  be  invested  in  accordance 
with  the  provisions  of  the  laws  of  this  commonwealth  relating  to  the 
investment  of  the  funds  of  savings  banks.  He  shall  in  the  invest- 
ment of  the  funds  give  preference  to  the  securities  of  the  city  or 
town  in  which  the  retirement  system  has  been  established.  He  may, 
whenever  he  sells  such  securities,  deliver  the  securities  so  sold  upon 
receiving  the  proceeds  thereof,  and  may  execute  anj^  and  all  docu- 
ments necessary  to  transfer  the  title  thereto. 

(4)  The  board  of  retirement  shall  have  jDower  to  make  by-laws 
and  regulations  not  inconsistent  with  the  provisions  of  this  act,  and 
to  employ  such  clerical  or  other  assistance  as  may  be  necessary  for 
the  fulfillment  of  its  purposes. 

(5)  The  board  may  classifj^  the  employees  for  the  purposes  of 
the  retirement  system,  and  may  establish  different  rates  of  contribu- 
tion for  the  various  classes,  subject  to  the  minimum  and  maximum 
limits  fixed  in  section  five,  (2)  A. 

(G)  The  city  or  town  treasurer  shall,  in  February  of  each  year, 
unless  for  cause  the  insurance  commissioner  shall  have  granted  an 
extension  of  time,  file  in  the  office  of  the  insurance  commissioner  a 
sworn  statement,  which  shall  exhibit  the  financial  condition  of  the 
retirement  system  on  the  thirty-first  day  of  the  preceding  January, 
and  its  financial  transactions  for  the  year  ending  with  said  day.  Such 
statement  shall  be  in  a  form  aj^proved  by  the  insurance  commis- 
sioner, and  shall  show,  among  other  things,  the  liability  of  the  re- 
tirement system  on  account  of  the  following  items :  — 


1910.]  HOUSE  — No.  1400.  353 


A.  Deposit  Reserve. 

The  total  of  the  deposits  of  the  members  actually  received  by  the 
treasurer  or  due  from  the  city  or  town  under  section  five,  (2)  A, 
and  held  subject  to  withdrawal  by  such  members. 

B.  I  III /rest  Reserve. 
Regular  interest  on  such  deposits, 

C.  Anmdty  Reserve. 

The  net  value  of  the  annuities  entered  upon  under  section  six, 
(2)  B,  on  the  basis  of  the  mortality  tables  and  interest  rates  pro- 
vided for  in  this  act. 

D.     Contribufion  Reserve. 
The  net  value  of  the  pensions  not  yet  entered  upon  under  section 
six,  (2)   C  (a),  on  the  basis  of  the  mortality  and  withdrawal  tables 
and  interest  rates  provided  for  in  this  act. 

E.     Pension  Reserve. 
The  net  value  of  the  pensions   entered  upon  under   section   six, 
(2)  C  (a),  on  the  basis  of  the  mortality  tables  and  interest  rates  pro- 
vided for  in  this  act. 

F.     Expense  and  Contingent  Funds, 
(a)   The  unexpended  portion  of  the  amounts  received  under  sec- 
tion five.  (1). 

(h)   The  contingent  fund. 

G.     Gifts  and  Bequests. 
The   amounts  received   as  gifts   or   bequests   and   held   under   the 
terms  of  such  gifts  or  bequests. 

H,     Other  Liabilities. 

(a)  The  amounts  contributed  by  the  city  or  town  under  section 
five,  (2)  B  (c),  and  not  distributed. 

(b)  AH  other  liabilities. 

I.     Surj^lus. 

(a)  Annuity  Surplus.  —  The  undistributed  surplus  arising  from 
aniuuty  deposits,  as  defined  in  section  five,  (2)  B  (6). 

(b)  Pension  Surplus.  —  The  undistributed  surplus  arising  from 
pension  contributions,  as  defined  in  section  five,  (2)  B  (b). 

(c)  Other  Surplus.  —  All  unassigned  funds. 


354  OLD   AGE   PENSIONS.  [Jan. 


CREATIOX  OF  THE  RETIREMENT  FUND. 

Section  5.  The  funds  of  the  I'etirement  system  shall  be  raised 
as  follows :  — 

(1)     Expense  and  Contingent  Fund. 

The  city  or  town  shall  appropriate  annually  such  an  amount  as 
may  be  necessary  to  defray  the  entire  expense  of  administration, 
according  to  estimates  j^rei^ared  by  the  treasurer. 

(2)     Annuity  and  Pension  Fund. 

A.  Deposits  by  Members.  —  Each  member  shall  deposit  in  this 
fund  from  his  wages  or  salary,  as  often  as  the  same  are  payable,  not 
less  than  one  per  cent  and  not  more  than  five  per  cent  of  his  wages 
or  salary,  as  the  board  of  retirement  shall  determine. 

B.  Contributions  by  the  City  or  Town. —  (a)  Each  month  the 
city  or  town  shall  contribute  such  amount  as  may  be  necessary  to 
maintain  the  contribution  and  pension  reserves  as  of  the  last  day  of 
the  preceding  month,  on  the  pensions  to  be  paid  under  section  six, 
(2)  C  (a).    ^ 

{b)  Each  year,  in  February,  the  city  or  town  shall  contribute  an 
amount  equal  to  the  excess  of  the  surplus  arising  from  annuity 
deposits  over  the  surplus  arising  from  pension  dejjosits.  The  said 
surplus  arising  from  annuity  deposits  shall  be  the  sum  of  that  por- 
tion of  the  interest  reserve  released  by  the  withdrawal  of  members 
under  section  six,  (2)  A  (a),  and  the  interest  earned  during  the 
year  ending  January  thirty-first  next  preceding  on  the  deposit  re- 
serve and  on  the  interest  reserve,  less  the  amount  necessary  to  main- 
tain, during  said  year,  the  said  interest  reserve.  The  said  surplus 
arising  from  the  pension  contributions  shall  be  the  sum  of  the  gain 
arising  during  said  year  from  a  mortality  or  withdrawal  experience 
among  the  members  making  annuity  deposits  in  excess  of  that  ex- 
pected, and  the  interest  earned  on  the  contribution  reserve  in  excess 
of  the  amount  required  to  maintain,  during  said  year,  the  said 
contribution  reserve.  If  for  any  year  the  surplus  arising  from  pen- 
sion contributions  shall  be  found  to  be  in  excess  of  the  surplus  aris- 
ing from  annuity  deposits,  such  excess  shall  forthwith  be  paid  over 
to  the  city  or  the  town. 

For  the  jjurposes  of  this  paragrai^h  the  board  of  retirement  shall 
adopt,  subject  to  the  approval  of  the  insui"ance  commissioner,  an 
equitable  method  of  determining  the  excess  interest  and  gain  from 
mortality  and  Avithdrawal  mentioned  therein. 

(c)  Each  month  the  city  or  town  shall  contribute  such  amount  as 
the  board  of  retirement  may  determine  to  be  necessary  to  pay 
current  pensions  for  prior  service  under  section  six,    (2)    C    (&)  : 


1910.]  HOUSE  — No.  1400.  355 

Ijrovidcd,  that  any  amount  so  contributeil  for  any  month  and  not 
needed  for  jiensions  for  that  month  shall  be  credited  to  the  contribu- 
tion of  tlie  f-ity  or  town  for  the  succeeding  month. 

(f/)  Each  month  the  city  or  town  sliall  contribute  such  amount  as 
the  board  of  retirement  may  determine  to  be  necessary  to  ensure  the 
minimum  payments  jirovided  for  in  section  six,  E. 

(3)     Provision  for  Payments. 

A.  All  amounts  payable  by  members  of  the  association  under 
paragraph  (2)  A  of  this  section  shall  be  deducted  by  the  city  or  town 
from  the  amounts  payable  to  them  as  wages  or  salary,  as  often  as 
the  same  are  payable,  and  shall  be  immediately  credited  to  the  pen- 
sion fund  by  the  city  or  town  treasurer. 

B.  All  accrued  obligations  on  the  part  of  the  city  or  town  under 
paragraphs  (1)  and  (2)  of  this  section  shall  be  preferred  claims 
against  the  city  or  town  in  like  manner  as  claims  for  unpaid  wages 
are  or  may  be  i:»referred. 

DISTRIBUTION    OF    FUXDS. 

Section  6.  The  city  or  town  treasurer  shall  administer  the  funds 
of  the  retirement  system  in  accordance  with  the  following  plan :  — 

(1)  Expense  and  Contimjcnt  Funds. 
The  funds  provided  for  under  section  five,  (1),  shall  be  used,  so 
far  as  may  be  necessary,  for  the  payment  of  the  expenses  of  admin- 
istration. The  portions  not  so  used,  if  any,  shall  be  carried  to  the 
contingent  fund,  any  portion  of  which  may  be  transferred  to  any 
other  fund  by  vote  of  the  board  of  retirement.  In  case  the  amount 
appropriated  for  the  expense  fund  in  any  year  should  prove  insutli- 
cient,  the  city  or  town  shall  approjjriate  in  the  following  year  such 
additional  sum  as  may  be  required  to  cover  the  deficit. 

(2)     Annuily  and  Pension  Funds. 

A.  Refunds. —  («)  Should  a  member  of  the  association  cease  to 
be  an  employee  of  the  city  or  toAvn  for  any  cause  other  than  death 
before  becoming  entitled  to  a  pension,  there  shall  be  refunded  to 
him  all  the  money  that  has  been  paid  in  by  him  under  section  five, 
(2)  ^1,  with  regular  interest. 

(b)  Should  a  member  of  the  association  die  before  becoming  en- 
titled to  a  pension,  there  shall  be  paid  to  his  legal  representatives  all 
the  money  that  has  been  joaid  in  by  him  under  section  five,  (2)  A, 
with  such  interest  as  shall  have  been  earned  on  such  deposits. 

B.  Annuities  from  Eniploijees'  Deposits.  —  Any  member  who 
reaches  the  age  of  sixty  years  and  has  been  in  the  continuous  sen-ice 


356  OLD   AGE   PENSIONS.  [Jan. 

of  the  city  or  town  for  fifteen  years  immediately  preceding,  and 
then  or  thereafter  retires  or  is  retired,  any  member  who  retires  or  is 
retired  at  the  age  of  seventy  years,  and  any  member  who  is  retired 
for  the  good  of  the  service  or  for  permanent  disability  under  the  pro- 
visions of  section  three,  (5),  (6),  shall  receive  an  annuity  to  which 
the  sum  of  his  deposits  under  section  five,  (2),  with  regular  interest, 
shall  entitle  him,  according  to  the  tables  adopted  by  the  board  of 
retirement,  in  one  of  the  following  f oi-ms :  — 

(a)  A  life  annuity,  payable  monthly. 

(6)  A  life  annuity,  paj^able  monthly,  with  the  provision  that  in 
the  event  of  the  death  of  the  annuitant  before  receiving  payments 
equal  to  the  sum  at  the  date  of  his  retirement  of  his  deposits  under 
section  five,  (2)  A,  with  regular  interest,  the  difference  shall  be 
I^aid  to  his  legal  representatives. 

C.  Pensions  derived  from  Contributions  hy  the  City  or  Town.  — 
(a)  Pensions  based  upon  subsequent  service.  Any  member  entitled 
to  an  annuity  under  ])aragraph  (2)  B,  of  this  section,  shall  receive 
in  addition  thereto  a  pension  for  life  payable  monthly  equivalent  to 
that  annuity,  to  be  paid  out  of  the  fund  contributed  by  the  city  or 
town  under  the  j^rovisions  of  section  five,   (2)  B   (a). 

(b)  Pensions  based  upon  prior  service.  Any  member  of  the  asso- 
ciation who  reaches  the  age  of  sixty  years,  having  been  in  the  con- 
tinuous service  of  the  city  or  town  for  fifteen  years  or  more  imme- 
diately preceding,  and  then  or  thereafter  retires  or  is  retired,  shall 
receive  in  addition  to  the  annuity  a  i^ension  provided  for  by  para- 
graphs (2)  B  and  C  (a)  of  this  section,  and  an  extra  pension  for 
life  as  large  as  the  amount  of  the  annuity  to  which  he  might  have 
acquired  a  claim  if  the  retirement  system  had  been  in  operation  at 
the  time  he  entered  the  service  of  the  city  or  town,  and  if  accord- 
ingly he  had  paid  regular  contributions  from  that  date  to  the  date  of 
the  establishment  of  the  retirement  association  at  the  same  rate  as 
that  first  adopted  by  the  board  of  retirement,  and  if  such  deductions 
had  been  accumulated  with  regular  interest. 

Employees  who  had  already  reached  the  age  of  sixty  years  at  the 
time  the  retirement  system  was  established,  and  employees  who  had 
already  reached  the  age  of  fifty-five  years  at  that  date  and  also  be- 
came members  of  the  association,  may  be  retired  under  the  provisions 
of  the  preceding  paragraph  without  having  completed  the  otherwise 
required  service  period  of  fifteen  years.  For  the  purpose  of  com- 
puting any  pension  payable  for  prior  service,  the  board  of  retire- 
ment may  estimate  on  the  basis  determined  by  them  the  wages  re- 
ceived at  any  period  for  which  they  may  deem  it  impracticable  to 
consult  the  original  records. 

B.  Application  of  Surplus.  —  The  board  of  retirement  shall  have 
power  to  determine  the  application  of  any  surplus,  as  defined  under 


1910.]  HOUSE  — No.  1400.  357 

section  four,  (6)  I,  subject  to  the  approval  of  the  insurance  com- 
missioner. 

E.  Minimum  Payments.  —  In  no  case  shall  the  total  monthly  pay- 
ment to  a  member  be  at  a  rate  less  than  two  hundred  dollars  jier 
year. 

/•'.  Association  Membership  and  Pension  Certificate.  —  Member- 
shii)  in  the  association  shall  be  evidenced  by  a  certificate  to  be  issued 
to  each  member  by  the  board  of  retirement,  and  the  right  to  an 
annuity  or  a  pension  shall  be  evidenced  by  a  policy  to  be  issued  to 
each  member  who  retires  or  is  retired  bv  the  board  of  retirement. 


TAXATIOX,    ATTACHMENTS    AND   ASSIGNMENTS. 

Section  7.  The  funds  of  the  retirement  system,  so  far  as  they 
are  invested  in  personal  property,  shall  be  exempt  from  taxation. 

That  portion  of  the  wages  of  a  member  deducted  or  to  be  deducted 
under  this  act,  the  right  of  a  member  to  an  annuity  or  pension,  and 
all  his  rights  in  the  funds  of  the  retirement  system  shall  be  exempt 
from  taxation,  and  from  the  operation  of  any  law  relating  to 
bankruptcy  or  insolvency,  and  shall  not  be  attached  or  taken  upon 
execution  or  other  process  of  any  court.  Xo  assignment  of  any  right 
in  or  to  said  funds  shall  be  valid. 

SUPERVISION    BY    INSURANCE    COMMISSIONER. 

Section  8.  The  insurance  commissioner  shall  prescribe  for  each 
city  or  town  that  adoi)ts  a  retirement  system  under  the  i^rovisions  of 
this  act  one  or  more  mortality  tables  and  one  or  more  tables  repre- 
senting as  nearly  as  may  be  the  rates  of  withdrawal  of  employees 
from  the  service  of  the  eitj'  or  town  for  reasons  other  than  death, 
and  shall  determine  what  rates  of  interest  shall  be  established  in 
connection  with  such  tables,  and  may  later  modify  such  tables  or 
prescribe  other  tables  to  represent  more  accurately  the  expense  of  the 
pension  system,  or  may  change  said  rates  of  interest  and  may  de- 
termine the  application  of  the  changes  so  made.  He  shall  also 
prescribe  and  sui)ervise  methods  of  bookkeeping'  of  each  retirement 
association  formed  under  the  provisions  of  this  act. 

The  insurance  commissioner  shall  at  least  once  in  each  year,  either 
personally  or  by  deputy  or  assistant,  thoroughly  inspect  and  examine 
the  affairs  of  the  retirement  association  to  ascertain  its  financial 
condition,  its  ability  to  fulfill  its  obligations,  whether  all  the  i)arties 
in  interest  have  comjilied  with  the  i)rovisions  of  the  law  ap])licable 
to  the  association,  and  whether  the  transactions  of  the  board  of  re- 
tirement have  been  in  accordance  with  the  rights  and  equities  of  those 
in  interest.  The  retirement  system  shall  be  credited,  in  the  account 
of  its  financial  condition,  with  the  amounts  due  from  the  citv  or 


358  OLD   AGE   PENSIONS.  [Jan. 

town,  uiulei-  the  provisions  of  section  five,  (2)  B  (a),  its  investments 
with  fixed  maturities  at  amortized  vah;es,  and  its  other  investments 
at  a  reasonable  valuation. 

For  the  purposes  aforesaid,  the  insurance  commissioner  or  other 
person  making  examination  shall  have  access  to  all  the  securities, 
books  and  papers  of  the  retirement  system,  and  may  summon  and 
administer  oaths  and  examine  as  Avitnesses  the  members  of  the 
board  of  retirement  or  any  other  person  relative  to  the  financial 
affairs,  transactions  and  conditions  of  the  retirement  system.  The 
insurance  commissioner  shall  preserve  in  a  permanent  form  a  full 
record  of  the  proceedings  at  such  examination,  and  the  results 
thereof.  Ujion  the  completion  of  such  examination,  verification  and 
valuation,  the  insurance  commissioner  shall  make  a  report  in  Avriting 
of  his  findings  to  the  board  of  retirement,  and  shall  send  a  copy 
thereof  to  the  city  council  or  the  board  of  selectmen. 

Section  9.  If,  in  the  judgment  of  the  insurance  commissioner, 
the  city  or  town  or  the  board  of  retirement  have  violated  or  neg- 
lected to  comply  with  any  of  the  provisions  of  this  act,  or  of  the 
rules  and  regulations  established  by  the  board  of  retirement  here- 
under, he  shall  give  notice  thereof  to  the  city  or  town  and  to  the 
board  of  retirement,  and  thereafter  if  such  violation  or  neglect  con- 
tinues, shall  forthwith  present  the  facts  to  the  attorney-general  for 
his  action. 

Section  10.  The  superior  court  shall  have  jurisdiction  in  equity 
upon  petition  of  the  insurance  commissioner  or  any  interested  party 
to  compel  the  observance  and  restrain  the  violation  of  this  act,  and 
of  the  rules  and  regulations  established  by  the  board  of  retirement 
hereunder. 

Section  11.     This  act  shall  take  effect  upon  its  passage. 


An  Act  to  establish  a  Retirement  System  for  the  Employees 

op  tpie  Commonwealth. 

Be  it  enacted,  etc.,  as  folloivs: 

Section  1.     In  this  act,  unless  the  context  otherwise  requires :  — 

(a)  The  words  "retirement  system"  mean  the  arrangements  pro- 
vided in  this  act  for  the  payment  of  pensions. 

(b)  The  word  "annuities"  means  the  payments  for  life  derived 
from  money  contributed  by  the  employees. 

(c)  The  word  "  pensions  "  means  the  payments  for  life  derived 
from  money  contributed  by  the  general  court. 

{(I)  The  words  "regular  interest  "  mean  interest  at  three  per  cent 
per  annum  compounded  semi-annually  on  the  last  days  of  December 
and  June,  and  reckoned  for  full  three  and  six  months  periods  only. 


1910.]  HOUSE  — No.  1400.  359 

(e)  The  words  "continuous  service"  mean  uninterrupted  employ- 
ment, with  this  exception :  a  lay-off  on  account  of  illness  or  reduction 
of  force;  and  a  leave  of  absence,  suspension  or  dismissal  followed 
by  reinstatement  within  one  year  shall  not  be  considered  as  breaking 
the  continuity  of  service.  " 

ESTABLISHMENT  OF   RETIREMENT   SYSTEM. 

Section  2.  The  retirement  system  shall  be  established  on  the 
first  day  of  January  or  the  first  day  of  July  following  the  expiration 
of  thi-ee  months  after  the  date  on  which  this  act  takes  effect. 

THE    RETIREMENT    ASSOCIATION. 

Section  3.  A  retirement  association  shall  be  organized  among 
the  employees  of  the  commonwealth  as  follows :  — 

(1)  All  emploj'ees  of  the  commonwealth,  on  the  date  when  the 
retii'ement  system  is  established,  may  become  members  of  the  associa- 
tion. On  the  expiration  of  sixty  days  from  said  date  every  such 
employee  shall  be  considered  to  have  elected  to  become,  and  shall 
thereby  become,  a  member,  unless  he  shall  have  within  that  pei'iod, 
sent  notice  in  writing  to  the  state  insurance  commissioner  that  he 
does  not  wish  to  join  the  association. 

(2)  All  emjiloyees  who  enter  the  service  of  the  commonwealth 
after  the  date  when  the  retirement  system  is  established,  except 
persons  who  have  already  passed  the  age  of  fifty-five  years,  shall 
upon  comi)leting  thirty  days  of  service  become  thereby  members  of 
the  association.  Persons  over  fifty-five  years  of  age  who  enter  the 
service  of  the  commonwealth  after  the  establishment  of  the  retire- 
ment system  shall  not  be  allowed  to  become  members  of  the  associa- 
tion, and  no  siu-h  employee  shall  rem.ain  in  the  service  of  the  com- 
monwealth after  reaching  the  age  of  seventy  years. 

(3)  Xo  officer  elected  by  jjopular  vote  may  become  a  member  of 
the  association,  nor  any  employee  who  is  or  will  be  entitled  to  a  pen- 
sion from  the  commonwealth  for  any  reason  other  than  membership 
in  the  association. 

(4)  Any  member  who  reaches  the  age  of  sixty  years  and  Avho  has 
been  in  the  continuous  service  of  the  commonwealth  for  a  period  of 
fifteen  years  immediately  i>receding  may  retire  or  may  be  retired  by 
the  board  of  retirement,  and  any  member  who  reaches  the  age  of 
seventy  years  must  so  retire. 

(5)  Any  member  who  has  completed  a  jieriod  of  thirty-five  years 
of  continuous  service  may  retire,  or  may  be  retired  at  any  age  by 
the  board  of  retirement  if  such  action  be  deemed  advisable  for  the 
good  of  the  service. 

(G)  Any  member  who  becomes  jTermanently  disabled  in  the  ser- 
vice of  the  commonwealth  shall  be  retired  by  the  board  of  retirement. 


360  OLD   AGE   PENSIONS.  [Jan. 


THE  BOARD  OF  RETIREMENT. 

Section  4.  (1)  The  management  of  the  retirement  system  is 
hereby  vested  in  the  board  of  retirement,  consisting  of  three  mem- 
bers, one  of  whom  shall  be  the  state  treasurer;  the  second  member 
shall  be  a  member  of  the  association  elected  by  the  latter  within 
thirty  days  after  the  date  on  which  the  retirement  system  is  estab- 
lished, in  a  manner  to  be  determined  by  the  state  insurance  commis- 
sioner; the  third  member  shall  be  an  employee  of  the  commonwealth, 
chosen  by  the  other  two  members.  In  ease  of  the  failure  of  the 
latter  to  choose  the  third  member  within  thirty  days  after  the  election 
of  the  second  member,  the  governor  shall  appoint  such  third  mem- 
ber. The  first  person  so  chosen  or  appointed  as  third  member  shall 
serve  for  two  years;  otherwise  and  thereafter  the  term  of  office  of 
the  two  elected  members  shall  be  three  years.  On  a  vacancy  occur- 
ring in  the  board  for  any  cause  or  on  the  expiration  of  the  term  of 
office  of  any  member,  a  successor  of  the  person  w4aose  place  has 
become  vacant  or  whose  term  has  expired  shall  be  chosen  in  the 
same  manner  as  his  predecessor. 

(2)  The  members  of  the  board  of  retirement  shall  serve  without 
compensation;  but  they  shall  be  reimbursed  out  of  the  retirement 
fund  for  any  expense  or  loss  of  salary  or  wages  which  they  may 
have  incurred  through  service  on  the  board. 

(3)  The  state  treasurer  shall  have  charge  and  control  of  the  funds 
of  the  system,  subject  to  the  approval  of  the  board  of  retirement, 
and  shall  invest  and  reinvest  the  same,  and  may  from  time  to  time 
sell  any  securities  held  by  him  and  invest  and  reinvest  the  proceeds 
therefrom,  and  any  and  all  unappropriated  income  of  said  funds: 
provided,  however,  that  all  funds  received  by  him  not  required  for 
current  disbursements  shall  be  invested  in  accordance  with  the  pro- 
visions of  the  laws  of  this  commonwealth  relating  to  the  investment 
of  the  funds  of  savings  banks.  He  shall  in  the  investment  of  the 
funds  give  preference  to  the  securities  of  the  commonwealth.  He 
may,  whenever  he  sells  such  securities,  deliver  the  securities  so  sold 
upon  receiving  the  proceeds  thereof,  and  may  execute  any  and  all 
documents  necessary  to  transfer  the  title  thereto. 

(4)  The  board  of  retirement  shall  have  power  to  make  by-laws 
.and  regulations  not  inconsistent  with  the  provisions  of  this  act,  and 
to  employ  such  clerical  or  other  assistance  as  may  be  necessary  for 
the  fulfillment  of  its  purposes. 

(5)  The  board  may  classify  the  employees  for  the  purposes  of 
the  retirement  system,  and  may  establish  different  rates  of  contri- 
bution for  the  various  classes  subject  to  the  minimum  and  maximum 
limits  fixed  in  section  five,  (2)  A. 


1910.]  HOUSE  — No.  1400.  361 

(6)  The  state  treasurer  shall,  in  January  of  each  year,  unless  for 
cause  the  insurance  commissioner  shall  have  granted  an  extension 
of  time,  file  in  the  office  of  the  insurance  commissioner  a  sworn 
statement,  which  shall  exhibit  the  financial  condition  of  the  retire- 
ment system  on  the  thirty-first  day  of  the  preceding  December,  and 
its  financial  transactions  for  the  year  ending  with  said  day.  Such 
statement  shall  be  in  a  form  approved  by  the  insurance  commis- 
sioner, and  shall  show,  among  other  things,  the  liability  of  the  re- 
tirement system  on  account  of  the  following  items :  — 

^1.     Deposit    Reserves. 

The  total  of  the  deposits  of  the  membei's  actually  received  by  the 
treasurer  or  due  from  the  commonwealth  under  section  five,  (2)  J., 
and  held  subject  to  withdrawal  by  such  members. 

B.  Interest   Reserve. 
Kegular  interest  on  such  deposits. 

C.  Annuity  Reserve. 

The  net  value  of  the  annuities  entered  upon  under  section  six, 
(2)  B,  on  the  basis  of  the  mortality  tables  and  interest  rates  pro- 
vided for  in  this  act. 

B.    Contribution  Reserve. 
The  net  value  of  the  pensions  not  yet  entered  ujDon  under  section 
six,  (2)  C  (a),  on  the  basis  of  the  mortality  and  withdrawal  tables 
and  interest  rates  provided  for  in  this  act. 

E.    Pension  Reserve. 
The  net  value  of  the  pensions  entered  upon  under  section  six,  (2j 
C   (a),  on  the  basis  of  the  mortality  tables  and  interest  rates  pro- 
vided for  in  this  act. 

F.    Expense  and  Contingent  Fund. 

(a)  The  unexpended  portion  of  the  amounts  received  under  sec- 
tion five,   (1). 

{())    The  contingent   fund. 

G.     Gifts  and  Bequests. 

The  amounts  received  as  gifts  or  bequests  and  held  under  the 
terms  of  such  gifts  or  bequests. 


362  OLD   AGE   PENSIONS.  [Jan. 


H.     Other  Liabilities, 
{a)   The  amounts  contributed  by  the  commonwealth  under  section 
five,  (2)  B  (c),  and  not  distributed. 
{h)  All  other  liabilities. 

I.     Surplus. 

(a)  Annuity  Surplus.  —  The  undistributed  surplus  arising  from 
annuity  deposits,  as  defined  in  section  five,   (2)  B   (b). 

(b)  Pension  Surplus.  —  The  luidistributed  sui^dIus  arising  from 
pension  contributions,  as  defined  in  section  five,   (2)   B   {b). 

(c)  Other  Surplus.  —  All  unassigned  funds. 

CREATION    OF   THE   RETIREMENT    FUND. 

Section  5.  The  funds  of  the  retirement  system  shall  be  raised 
as  follows :  — 

(1)     Expense  and  Contingent  Fund. 

The  general  court  shall  ai)]n'opriate  aiunially  such  an  amount 
as  may  be  necessary  to  defray  the  entire  expense  of  administration, 
according  to  estimates  prepared  by  the  treasurer. 

(2)      Annuity  and  Pension  Fund. 

A.  Deposits  by  Members.  —  Each  member  sliall  deposit  in  this 
fund  from  his  wages  or  salary,  as  often  as  the  same  are  payable, 
not  less  than  one  per  cent  and  not  more  than  five  per  cent  of 
his  wages  or  salarj^,  as  the  board  of  retirement  shall  determine. 

B.  Contributions  of  the  Commonwealth. —  (a)  Each  month  the 
commonwealth  shall  contribute  such  amount  as  may  be  necessary 
to  maintain  the  contribution  and  i^ension  reserves  as  of  the  last 
day  of  the  preceding  month,  on  the  pensions  to  be  paid  under  sec- 
tion six,  (2)  C  (a). 

(b)  Each  year,  in  January,  the  commouAvealth  shall  contribute 
an  amount  equal  to  the  excess  of  the  surplus  arising  from  annuity 
deposits  over  the  surplus  arising  from  pension  contributions.  The 
said  surplus  arising  from  annuity  deposits  shall  be  the  sum  of  that 
portion  of  the  interest  reserve  released  by  the  withdrawal  of  mem- 
bers under  section  six,  (2)  A  (a),  and  the  interest  earned  during 
the  year  ending  December  thirty-first  next  preceding  on  the  deposit 
reserve  and  on  the  interest  reserve,  less  the  amount  necessai-y  to 
maintain,  during  said  year,  the  said  interest  reserve.  The  said 
surplus  arising  from  the  pension  contributions  shall  be  the  sum  of 
the  gain  arising  during  said  year  from  a  mortality  or  withdrawal 
experience  among  the  members  making  annuity  deposits  in  excess 
of  that  expected,  and  the  interest  earned  on  the  contribution  reserve 


1910.]  HOUSE  — No.  1400.  363 

in  excess  of  the  amount  required  to  maintain,  during  said  year, 
the  said  contribution  reserve.  If  for  any  year  the  surplus  arising 
from  pension  contributions  shall  be  found  to  be  in  excess  of  the 
surplus  arising  from  annuity  deposits,  such  excess  shall  forthwith 
be  i)aid  over  to  the  commonwealth. 

For  the  purposes  of  this  paragraph  the  board  of  retirement  shall 
adopt,  subject  to  the  approval  of  the  insurance  commissioner,  an 
equitable  method  of  determining  the  excess  interest  and  gain  from 
mortality  and  withdrawal  mentioned  therein. 

(e)  Each  month  the  commonwealth  shall  contribute  such  amount 
as  the  board  of  retirement  may  determine  to  be  necessary  to  jjay 
current  pensions  for  prior  service  under  section  six,  (2)  C  {h)  : 
provided,  that  any  amount  so  contributed  for  any  month  and  not 
needed  for  pensions  for  that  month  shall  be  credited  to  the  con- 
tribution of  the  commonwealth  for  the  succeeding  month. 

(d)  Each  month  the  commonwealth  shall  contribute  such  amount 
as  the  board  of  retirement  may  determine  to  be  necessary  to  ensure 
the  minimum  payments  provided  for  in  section  six,  E. 

(3)     Provision  for  Payments. 

A.  All  amounts  payable  hy  members  of  the  association  under 
paragrajih  (2)  A  of  this  section  shall  be  deducted  by  the  common- 
wealth from  the  amounts  payable  to  them  as  Avages  or  salary,  as 
often  as  the  same  are  payable,  and  shall  be  immediately  credited 
to  the  retirement  fund  by  the  state  treasurer. 

B.  All  accrued  obligations  on  the  part  of  the  commonwealth 
under  paragraphs  (1)  and  (2)  of  this  section  shall  be  preferred 
claims  against  the  commonwealth  in  like  manner  as  claims  for  un- 
lia'd  wages  are  or  may  be  pi'eferred. 

DISTRIBUTION    OF    FUNDS. 

Section  6.  The  state  treasurer  shall  administer  the  funds  of  the 
pension  system  in  accordance  with  the  following  plan :  — 

(1)  Expense  and  Contingent  Funds. 

The  funds  provided  for  under  section  five,  (1),  shall  be  used, 
so  far  as  may  be  necessary,  for  the  payment  of  the  expenses  of 
administration.  The  portions  not  so  used,  if  any,  shall  be  carried 
to  the  contingent  fund,  any  portion  of  which  may  be  transferred 
to  any  other  fund  by  vote  of  the  board  of  retirement.  In  ease  the 
amount  appropriated  for  the  expense  fund  in  any  year  should  prove 
insufficient,  the  commonwealth  shall  appropriate  in  the  following 
year  such  additional  sum  as  may  be  required  to  cover  the  deficit. 


364  OLD   AGE    PENSIONS.  [Jan. 


(2)   Annuity  and  Pension  Funds. 

A.  Refunds.  —  (a)  Should  a  member  of  the  association  cease 
to  be  an  employee  of  the  commonwealth  for  any  cause  other  than 
death  before  becoming  entitled  to  a  pension,  there  shall  be  refunded 
to  him  all  the  money  that  has  been  paid  in  by  him  under  section 
five,  (2)  A,  with  regular  interest. 

(b)  Should  a  member  of  the  association  die  before  becoming  en- 
titled to  a  pension,  there  shall  be  paid  to  his  legal  representatives 
all  the  money  that  has  been  paid  in  by  him  under  section  five,  (2) 
A,  with  such  interest  as  shall  have  been  earned  on  such  deposits. 

B.  Annuities  from  Employees'  Deposits.  —  Any  member  who 
reaches  the  age  of  sixty  years  and  has  been  in  the  continuous  service 
of  the  commonwealth  for  fifteen  years  immediately  preceding,  and 
then  or  thereafter  retires  or  is  retired,  any  member  who  retires  or 
is  retired  at  the  age  of  seventy  years,  and  any  member  who  is  re- 
tired for  the  good  of  the  service  or  for  permanent  disability  under 
the  provisions  of  section  three,  (5),  (6),  shall  receive  an  annuity 
to  which  the  sum  of  his  deposits  under  section  five,  (2),  with  reg- 
ular interest,  shall  entitle  him,  according  to  the  tables  adopted  by 
the  board  of  retirement,  in  one  of  the  following  forms :  — 

(a)  A  life  annuity,  payable  monthly. 

(&)  A  life  annuity,  payable  monthly,  with  the  provision  that  in 
the  event  of  the  death  of  the  annuitant  before  receiving  payments 
equal  to  the  sum  at  the  date  of  his  retirement  of  his  deposits  under 
section  five,  (2)  A,  with  regular  interest,  the  difference  shall  be 
l)aid  to  his  legal  representatives. 

C.  Pensions  derived  from  Contributions  by  the  Commonwealth. 
—  (a)  Pensions  based  upon  subsequent  service.  Any  member  en- 
titled to  an  annuity  under  paragraph  (2)  B  of  this  section  shall 
receive  in  addition  thereto  a  pension  for  life  payable  monthly 
equivalent  to  that  annuity,  to  be  paid  out  of  the  fund  contributed 
liy  the  commonwealth  under  the  provisions  of  section  five,  (2) 
B  (a). 

(b)  Pensions  based  upon  prior  service.  Any  member  of  the 
association  who  reaches  the  age  of  sixty  years,  ha\dng  been  in  the 
continuous  service  of  the  commonwealth  for  fifteen  years  or  more 
immediately  preceding,  and  then  or  thereafter  retires  or  is  retired, 
shall  receive  in  addition  to  the  annuity  a  pension  provided  for  by 
paragraphs  (2)  B  and  C  (a)  of  this  section,  and  an  extra  pension 
for  life  as  large  as  the  amount  of  the  annuity  to  which  he  might 
have  acquired  a  claim  if  the  retirement  system  had  been  in  opera- 
tion at  the  time  he  entered  the  service  of  the  commonwealth,  and 
if  accordingly  he  had  paid  regular  contributions  from  that  date  to 
the  date  of  the  establishment  of  the  retirement  association   at   the 


1910.]  HOUSE  — No.  1400.  365 

same  rate  as  that  first  adopted  by  the  board  of  retirement,  and  if 
such  deductions  had  been  accumulated  with  regular  interest. 

Employees  who  had  already  reached  the  age  of  sixty  years  at 
the  time  the  retirement  system  was  established,  and  employees  who 
had  already  reached  the  age  of  fifty-five  j-ears  at  that  date,  and  also 
became  members  of  tlie  association,  may  be  retired  under  the  pro- 
visions of  the  })receding  paragraph  Avithout  having  completed  the 
otherwise  required  service  period  of  fifteen  years.  For  the  pui'pose 
of  computing  any  pension  payable  for  prior  service,  the  board  of 
retirement  may  estimate  on  the  basis  determined  by  them  the  wages 
received  at  anj-  period  for  which  they  may  deem  it  impracticable 
to  consult  the  original  records. 

1).  Application  of  Surplus.  —  The  board  of  retirement  shall  have 
power  to  determine  the  application  of  any  surplus,  as  defined  under 
section  four  (6)  7,  subject  to  the  aj^proval  of  the  insurance  com- 
missioner. 

E.  Minimum  Payments.  — ■  In  no  case  shall  the  total  monthly 
payment  to  a  member  be  at  a  rate  less  than  two  hundred  dollars 
per  year. 

F.  Association  Membership  and  Pension  Certificate.  —  Member- 
ship in  the  association  shall  be  evidenced  by  a  certificate  to  be 
issued  to  each  member  by  the  board  of  retirement,  and  the  right 
ro  an  annuity  or  a  jiension  shall  be  evidenced  by  a  policy  to  be 
issued  to  each  member  who  retires  or  is  retired  by  the  board  of 
retirement. 

TAXATION,    ATTACHMENTS   AND   ASSIGNMENTS. 

Section  7.  The  funds  of  the  retirement  system,  so  far  as  they 
are  invested  in  personal  property,  shall  be  exempt  from  taxation. 

That  jxirtion  of  tlie  wages  of  a  member  deducted  or  to  be  deducted 
under  this  act,  the  right  of  a  member  to  an  annuity  or  pension,  and 
all  his  rights  in  the  funds  of  the  retirement  system  shall  be  exempt 
from  taxation,  and  from  the  operation  of  any  law  relating  to 
bankruptcy  or  insolvency,  and  shall  not  be  attached  or  taken  upon 
execution  or  other  process  of  any  court.  No  assignment  of  any 
right  in  oi-  to  said  funds  shall  be  valid. 

SUPERVISION  BY  INSURANCE  COMMISSIONER. 

Section  8.  The  insurance  commissioner  shall  prescribe  for  the 
retirement  system  of  the  commonwealth  one  or  more  mortality  tables 
and  one  or  more  tables  representing  as  nearly  as  may  be  the  rates 
of  withdrawal  of  employees  from  the  service  of  the  commonwealth 
for  reasons  other  than  death,  and  shall  determine  what  rates  of 
interest  shall  be  established  in  connection  with  such  tables,  and  may 
later  modify  such  tables  or  prescribe  other  tables  to  represent  more 


366  OLD   AGE   PENSIONS.  [Jan. 

accurately  the  expense  of  the  retirement  system,  or  may  change 
said  rates  of  interest  and  may  determine  the  application  of  the 
changes  so  made.  He  shall  also  prescribe  and  supervise  methods 
of  bookkeeping  of  the  retirement  association  formed  under  the  pro- 
visions of  this  act. 

The  insurance  commissioner  shall  at  least  once  in  each  year,  either 
personally  or  by  deputy  or  assistant,  thoroughly  inspect  and  ex- 
amine the  atfairs  of  the  retirement  association  to  ascertain  its 
financial  condition,  its  inability  to  fulfill  its  obligations,  whether  all 
parties  in  interest  have  complied  with  the  provisions  of  law  appli- 
calile  to  the  retirement  association,  and  whether  the  transactions  of 
the  board  of  retirement  have  been  in  accordance  with  the  rights 
and  equities  of  those  in  interest.  The  retirement  system  shall  be 
credited,  in  the  account  of  its  financial  condition,  with  the  amounts 
due  from  the  commonwealth,  under  the  provisions  of  section  five, 
(2)  B  (a),  its  investments  with  fixed  maturities  at  amortized  values, 
and  its  other  investments  at  a  reasonable  valuation. 

For  the  purposes  aforesaid,  the  insurance  commissioner  or  other 
persons  making  examination  shall  have  access  to  all  the  securities, 
books  and  papers  of  the  retirement  system,  and  may  summon  and 
administer  oaths  and  examine  as  witnesses  the  members  of  the  board 
of  retirement  control  or  any  other  person  relative  to  the  financial 
affairs,  transactions  and  conditions  of  the  retirement  system.  The 
insurance  commissioner  shall  preserve  in  a  permanent  form  a  full 
record  of  the  proceedings  at  such  examination,  and  the  results 
thereof.  Upon  the  completion  of  such  examination,  verification  and 
valuation,  the  insurance  commissioner  shall  make  a  report  in  writ- 
ing of  his  findings  to  the  board  of  retirement,  and  shall  send  a  copy 
thereof  to  the  governor  and  the  executive  council  of  the  common- 
wealth. 

Section  9.  If,  in  the  judgment  of  the  insurance  commissioner, 
the  commonwealth  or  the  board  of  retirement  have  violated  or  neg- 
lected to  comply  with  any  of  the  provisions  of  this  act,  or  of  the 
rules  and  regulations  established  by  the  board  of  retirement  here- 
under, he  shall  give  notice  thereof  to  the  commonwealth  and  to  the 
board  of  retirement,  and  thereafter  if  such  violation  or  neglect 
continues  shall  forthwith  present  the  facts  to  the  attorney-general 
for  his  action. 

Section  10.  The  suiDerior  court  shall  have  jurisdiction  in  equity 
upon  petition  of  the  insurance  commissioner  or  any  interested  party 
to  compel  the  observance  and  restrain  the  violation  of  this  act, 
and  of  the  rules  and  regulations  established  by  the  board  of  re- 
tirement hereunder. 

Section  11.     This  act  shall  take  effect  upon  its  passage. 


1910.]  HOUSE  — No.  1400.  367 


Ax    xVCT    TO    AUTHORIZE    THE    COUNTIES    OF    THE    COMMONWEALTH    TO 
ESTABLISH    RETIREMENT    SYSTEMS    FOR    THEIR    EMPLOYEES. 

Be  it  enacted,  etc.,  as  follows: 

Section  1.  In  this  act,  unless  the  context  otherwise  requires:  — 
(a)   The  words  ''retirement  system"  mean  the  arrangements  pro- 
vided in  this  act  for  the  i^ayment  of  annuities  and  pensions. 

{b)  The  word  "annuities"  means  the  payments  for  life  derived 
from  money  contributed  by  the  emploj-ees. 

(c)  The  word  ''pensions"  means  the  payments  for  life  derived 
from  money  contributed  by  the  county. 

(d)  The  words  "regular  interest  "  mean  interest  at  three  per  cent 
per  annum  compounded  semi-annually  on  the  last  days  of  December 
and  June,  and  reckoned  for  full  three  and  six  months  periods  only. 

(e)  The  words  "  continuous  service  "  mean  uninterrupted  employ- 
ment, with  this  exception :  a  lay-off  on  account  of  illess  or  reduction 
of  force;  and  a  leave  of  absence,  suspension  or  dismissal  followed 
by  reinstatement  within  one  year  shall  not  be  considered  as  break- 
ing the  continuity  of  ser\'ice. 

ESTABLISHMENT    OF    RETIREMENT    SYSTEM. 

Section  2.  Any  county  in  this  commonwealth  may  establish  a 
retirement  system  for  its  employees  by  accepting  the  provisions  of 
this  act  in  the  manner  hereinafter  prescribed,  as  follows:  Upon  the 
initiative  of  the  county  commissioners,  the  question  of  acceptance 
shall  be  submitted  to  the  voters  of  the  county  at  the  next  election. 
The  vote  in  each  case  shall  be  in  answer  to  the  question,  to  be 
placed  upon  the  ballot :   Shall  an  act  passed  by  the  general  court 

in  the  year  ,  entitled  "  An  Act  authorizing  the  counties  of  this 

commonwealth  to  establish  retirement  systems  for  their  employees," 
be  accepted?  If  a  majority  of  the  voters  voting  thereon  at  such 
election  shall  vote  in  the  affirmative,  this  act  shall  take  effect  in 
such  county,  as  hereinafter  provided. 

A  copy  of  the  vote,  sworn  to  by  the  county  commissioners  or  the 
officers  corresponding  thereto,  shall,  within  thirty  days  after  the 
date  of  the  vote,  be  filed  in  the  office  of  the  insurance  commissioner 
of  this  commonwealth.  The  latter  shall  forthwith  issue  a  certificate 
that  the  retirement  system  is  declared  established  in  such  county,  to 
become  operative  on  the  first  day  of  January  or  the  first  day  of 
July  following  the  expiration  of  three  months  after  the  date  of 
such  certificate. 

THE   RETIREMENT    ASSOCIATION. 

Section  .3.  Whenever  a  county  shall  have  voted  to  establish  a 
retirement  system  under  the  provisions  of  section  two,  a  retirement 
association  shall  be  organized  as  follows :  — 


368  OLD   AGE   PENSIONS.  [Jan. 

(1)  All  employees  of  the  county,  on  the  date  when  the  retirement 
system  is  declared  established  by  the  issue  of  the  certificate,  as 
provided  in  section  two,  may  become  members  of  the  association. 
On  the  expiration  of  sixty  days  from  said  date  every  such  employee 
shall  be  considered  to  have  elected  to  become,  and  shall  thereby 
become,  a  member,  unless  he  shall  have,  within  that  joeriod,  sent 
notice  in  writing  to  the  local  election  commissioners  or  the  ofKcers 
corresponding  thereto  that  he  does  not  wish  to  join  the  association. 

(2)  All  employees  who  enter  the  service  of  the  county  after  the 
date  when  the  retirement  system  is  declared  established  by  the 
issue  of  the  certificate,  as  provided  in  section  two,  excei)t  persons  who 
have  already  passed  the  age  of  fifty-five  years,  shall  upon  com- 
pleting thirty  days  of  service  become  thereby  members  of  the  as- 
sociation. Persons  over  fifty-five  years  of  age  who  enter  the  sei'vice 
of  the  county  after  the  establishment  of  the  retirement  system 
shall  not  be  allowed  to  become  members  of  the  association,  and  no 
such  employee  shall  remain  in  the  service  of  the  county  after  reach- 
ing the  age  of  seventy  years. 

(3)  No  officer  elected  by  popular  vote  may  become  a  member 
of  the  association,  nor  any  employee  who  is  or  Avill  be  entitled  to 
a  pension  from  the  county  for  any  reason  other  than  membership 
in  the  association. 

(4)  Any  member  who  reaches  the  age  of  sixty  years  and  who 
has  been  in  the  continuous  service  of  the  county  for  a  period  of 
fifteen  years  immediately  preceding  may  retire  or  may  be  retired 
by  the  board  of  retirement,  and  any  member  who  reaches  the  age 
of  seventy  years  must  so  retii'e. 

(5)  Any  member  wjio  has  completed  a  period  of  thirty-five  j'ears 
of  continuous  service  may  retire,  or  may  be  retired  at  any  age  by 
the  board  of  retirement  if  such  action  be  deemed  advisable  for  the 
good  of  the  service. 

(6)  Any  member  who  becomes  permanently  disabled  in  the  serv- 
ice of  the  county  shall  be  retired  by  the  board  of  retirement. 

THE    BOARD    OF    RETIREMENT. 

Section  4.  (1)  The  management  of  the  retirement  system  is 
hereby  vested  in  the  board  of  retirement,  consisting  of  three  mem- 
bers, one  of  whom  shall  be  the  county  treasurer;  the  second  member 
shall  be  a  member  of  the  association  elected  by  the  latter  within 
thirty  days  after  the  date  when  the  retirement  system  is  declared 
established  by  the  issue  of  the  certificate,  as  provided  under  section 
two,  in  a  manner  to  be  determined  by  the  county  commissioners; 
the  third  member  shall  be  an  employee  of  the  county,  chosen  by 
the  other  two  members.  In  case  of  the  failure  of  the  latter  to 
choose  the  third  member  within  thirty  days  after  the  election  of  the 


1910.]  HOUSE  — No.  1400.  369 

second  membei%  the  chairman  of  the  county  commissioners  shall 
appoint  such  third  member.  The  first  person  so  chosen  or  appointed 
as  tliird  member  shall  serve  for  two  years;  otherwise  and  thereafter 
the  term  of  otiice  of  the  two  elected  members  shall  be  three  years. 
On  a  vacancy  occurring:  in  the  board  for  any  cause  or  on  the  ex- 
piration of  the  term  of  office  of  any  member,  a  successor  of  the 
person  whose  place  has  become  vacant  or  whose  term  has  expired 
shall  be  chosen  in  the  same  manner  as  was  his  predecessor. 

( 2 )  The  members  of  the  board  of  retirement  shall  serve  without 
compensation ;  but  they  shall  be  reimbursed  out  of  the  retirement 
fund  for  any  exjiense  or  loss  of  salary  or  wages  which  they  may 
have  incurred  through  service  on  the  board. 

(3)  The  county  treasurer  shall  have  charge  and  control  of  the 
funds  of  the  system,  subject  to  the  approval  of  the  board  of  re- 
tirement, and  shall  invest  and  reinvest  the  same,  and  may  from 
time  to  time  sell  any  securities  held  by  him  and  invest  and  reinvest 
the  proceeds  therefrom,  and  anj"  and  all  unappropi'iated  income  of 
said  funds:  provided,  however,  that  all  funds  received  by  him  not 
required  for  current  disbursements  shall  be  invested  in  accordance 
with  the  provisions  of  the  laws  of  this  commonwealth  I'elating  to 
the  investment  of  the  funds  of  savings  banks.  He  shall  in  the 
investment  of  the  funds  give  preference  to-  the  securities  of  the 
county.  He  may,  whenever  he  sells  such  securities,  deliver  the  se- 
curities so  sold  upon  receiving  the  proceeds  thereof,  and  may  ex- 
ecute any  and  all  documents  necessary  to  transfer  the  title  thereto. 

(4)  The  board  of  retirement  shall  have  power  to  make  by-laws 
and  regulations  not  inconsistent  with  the  provisions  of  this  act,  and 
to  employ  such  clerical  or  other  assistance  as  may  be  necessary  for 
the  fulfillment  of  its  purposes. 

(5)  The  board  may  classify  the  employees  for  the  purposes  of 
the  retirement  system,  and  may  establish  different  rates  of  con- 
tribution for  the  various  classes,  subject  to  the  minimum  and  maxi- 
mum limits  fixed  in  section  five,  (2)  A. 

(6)  The  county  treasurer  shall,  in  January  of  each  year,  unless 
for  cause  the  insurance  commissioner  shall  have  granted  an  ex- 
tension of  time,  file  in  the  office  of  the  insurance  commissioner  a 
sworn  statement,  which  shall  exhibit  the  financial  condition  of  the 
retirement  system  on  the  thirty-first  day  of  the  preceding  December, 
ami  its  financial  transactions  for  the  year  ending  with  said  day. 
Such  statement  shall  be  in  a  form  approved  by  the  insurance  com- 
missioner, and  shall  show,  among  other  things,  the  liability  of  the 
retirement  svstem  on  account  of  the  followinsr  items:  — 


370  OLD   AGE   PENSIONS.  [Jan. 


A.  Deposit  Beserve. 

The  total  of  the  deposits  of  the  members  actually  received  by  the 
treasurer  or  due  from  the  county  under  section  five,  (2)  A,  and 
held  subject  to  withdrawal  by  such  members. 

B.  Interest  Reserve. 
Regular  interest  on  such  deposits. 

C.  Annuity  Reserve. 

The  net  value  of  the  annuities  entered  upon  under  section  six, 
(2)  B,  on  the  basis  of  the  mortality  tables  and  interest  rates  provided 
for  in  this  act. 

D.     Contribution  Reserve. 

The  net  value  of  the  pensions  not  yet  entered  upon  under  section 
six,  (2)  C  (a),  on  the  basis  of  the  mortality  and  withdi'a\val  tables 
and  interest  rates  i^rovided  for  in  this  act. 

E.     Pension  Reserve. 
The  net  value  of  the  pensions  entered  upon  under  section  six,  (2) 
C   (a),  on  the  basis  of  the  mortality  tables  and  interest  rates  pro- 
vided for  in  this  act. 

F.     Expense  and  Contingent  Fund, 
(a)   The  unexpended  portion  of  the  amounts  received  under  sec- 
tion five,  (1). 

(h)   The  contingent  fund. 

G.     Gifts   and  Bequests. 
The  amounts  received  as  gifts  or  bequests  and  held  under  the  terms 
of  such  gifts  or  bequests. 

H.     Other  Liabilities. 

(a)  The  amounts  contributed  by  the  commonwealth  under  section 
five,  (2)  B  (c),  and  not  distributed. 

(b)  All  other  liabilities. 

I.     Surplus. 

(a)  Annuity  Surplus.  —  The  undistributed  surplus  arising  from 
annuity  deposits,  as  defined  in  section  five,   (2)  B  (b). 

(b)  Pension  Surplus.  —  The  undisturbed  surplus  arising  from 
pension  contributions,  as  defined  in  section  five,   (2)  B  (b). 

(c)  Other  Surplus.  —  All  unassigned  funds. 


1910.]  HOUSE  — No.  1400.  371 


CREATIOX   OF  THE  KETIRE:>XEXT   KUXD. 

Section  .').  The  fuiuls  of  the  retirement  system  shall  be  raised  as 
follows :  — 

(1)      Expense  and  Contingent  Fund. 

The  county  shall  appropriate  annually  such  an  amount  as  may 
be  necessary  to  clef  ray  the  entire  expense  of  administration,  'accord- 
ing to  estimates  prepared  by  the  treasurer. 

(2)     Annuity  and  Pension  Fund. 

A.  Deposits  by  Members.  —  Each  member  shall  deposit  in  this 
fund  from  his  wages  or  salary,  as  often  as  the  same  are  payable, 
not  less  than  one  per  cent  and  not  more  than  five  per  cent  of  his 
wages  or  salary,  as  the  board  of  retirement  shall  determine. 

B.  Contributions  by  the  County. —  (a)  Each  month  the  county 
shall  contribute  such  amount  as  may  be  necessary  to  maintain  the 
contribution  and  pension  reserves  as  of  the  last  day  of  the  pre- 
ceding month,  on  the  pensions  to  be  paid  under  section  six,  (2) 
C  (a). 

(b)  Each  year,  in  January,  the  county  shall  contribute  an  amount 
equal  to  the  excess  of  the  surplus  arising  from  annuity  deposits 
over  the  surplus  arising  from  pension  contributions.  The  said  sur- 
plus arising  from  annuity  deposits  shall  be  the  sum  of  that  portion 
of  the  interest  reserve  released  by  the  withdrawal  of  members  under 
section  six,  (2)  A  (a),  and  the  interest  earned  during  the  year 
ending  December  thirty-first  next  preceding  on  the  deposit  reserve 
and  on  the  interest  reserve,  less  the  amount  necessary  to  maintain, 
during  said  year,  the  said  interest  reserve.  The  said  surplus  arising 
from  the  pension  contributions  shall  be  the  sum  of  the  gain  arising 
during  said  year  from  a  mortality  or  withdrawal  exi)erience  among 
the  members  making  annuity  deposits  in  excess  of  that  expected,  and 
the  interest  earned  on  tlie  contribution  reserve  in  excess  of  the 
amount  required  to  maintain,  during  said  year,  the  said  contribution 
reserve.  If  for  any  year  the  surjjlus  arising  from  pension  con- 
tributions shall  be  found  to  be  in  excess  of  the  surplus  arising  from 
annuity  deposits,  such  excess  shall  forthwith  be  paid  over  to  the 
county. 

For  the  purposes  of  this  paragraph  the  board  of  retirement  shall 
adopt,  subject  to  the  approval  of  the  insurance  commissioner,  an 
equitable  method  of  determining  the  excess  interest  and  gain  from 
mortality  and  withdrawal   mentioned  therein. 

(f)  Each  month  the  county  shall  contribute  such  amount  as  the 
board  of  retirement  may  determine  to  be  necessary  to  pay  current 
pensions  for  prior  sei-vice  under  section  six,   (2)   C   (b)  :  provided, 


372  OLD   AGE   PENSIONS.  [Jan. 

that  any  amount  so  contributed  for  any  month  and  not  needed  for 
pensions  for  that  month  shall  be  credited  to  the  contribution  of  the 
county  for  the  succeeding  month. 

(d)  Each  month  the  county  shall  contribute  such  amount  as  the 
board  of  retirement  may  determine  to  be  necessary  to  ensure  the 
minimum  payments  provided  for  in  section  six,  E. 

(3)    Provision  for  Payments. 

A.  All  amounts  payable  by  members  of  the  association  under 
paragraph  (2)  A  of  this  section  shall  be  deducted  by  the  county 
from  the  amounts  payable  to  them  as  wages  or  salary,  as  often  as 
the  same  are  payable,  and  shall  be  immediately  credited  to  the 
pension  fund  by  the  county  treasurer. 

B.  All  accrued  obligations  on  the  part  of  the  county  under  pai-a- 
graphs  (1)  and  (2)  of  this  section  shall  be  preferred  claims  against 
the  county  in  like  manner  as  claims  for  unpaid  wages  are  or  may 
be  preferred. 

DISTRIBUTION   OF   FUNDS. 

Section  6.  The  county  treasurer  shall  administer  the  funds  of 
the  retirement  system  in  accordance  with  the  following  plan :  — 

'  (1)     Expense  and  Contingent  Funds. 

The  funds  provided  for  under  section  five,  (1),  shall  be  used,  so 
far  as  may  be  necessary,  for  the  payment  of  the  expenses  of  ad- 
ministration. The  portions  not  so  used,  if  any,  shall  be  carried 
to  the  contingent  fund,  any  portion  of  which  may  be  transferred 
to  any  other  fund  by  vote  of  the  board  of  retirement.  In  case 
the  amount  appropriated  for  the  expense  fund  in  any  year  should 
prove  insufficient,  the  county  shall  appropriate  in  the  following 
year  such  additional  sum  as  may  be  required  to  cover  the  deficit. 

(2)     Annuity  and  Pension  Funds. 

A.  Refunds.—  (a)  Should  a  member  of  the  association  cease 
to  be  an  employee  of  the  county  for  any  cause  other  than  death 
before  becoming  entitled  to  a  pension,  there  shall  be  refunded  to 
him  all  the  money  that  has  been  paid  in  by  him  under  section  five, 
(2)  A,  with  regular  interest. 

(h)  Should  a  member  of  the  association  die  before  becoming  en- 
titled to  a  pension,  there  shall  be  paid  to  his  legal  representatives 
all  the  money  that  has  been  paid  in  by  him  under  section  five, 
(2)  A,  with  such  interest  as  shall  have  been  earned  on  such  deposits. 

B.  Annuities  from  Employees'  Deposits.  —  Any  member  who 
reaches  the  age  of  sixty  years  and  has  been  in  the  continuous  service 
of  the  county   for   fifteen   years  immediately   preceding,   and   then 


1910.]  HOUSE  — No.  1400.  373 

or  thereafter  retires  or  is  retired,  any  member  who  retires  or  is 
retired  at  tlie  aae  of  seventy  .years,  and  any  member  who  is  retired 
for  the  good  of  the  service  or  for  permanent  disability  under  the 
provisions  of  section  three,  (5),  (6),  shall  receive  an  annuity  to 
which  the  sum  of  his  deposits  under  section  five,  (2),  with  regular 
interest,  shall  entitle  him,  according-  to  the  tables  adopted  by  the 
board  of  i-etirement,  in  one  of  the  following-  forms :  — 

{a)   A  life  annuity,  payable  monthly. 

(/;)  A  life  annuity,  payable  monthly,  with  the  pi'ovision  that  in 
the  event  of  the  death  of  the  annuitant  before  receiving-  payments 
equal  to  the  sum  at  the  date  of  his  retirement  of  his  deposits  under 
section  five.  (2)  A,  with  regular  interest,  the  difference  shall  be  paid 
to  his  legal  representatives. 

C.  Pensions  derived  from  Contributions  by  the  County.  —  (a) 
Pensions  'based  upon  subsequent  service.  Any  member  entitled  to 
an  annuity  under  jjaragraph  (2)  5  of  this  section  shall  receive  in 
addition  thereto  a  pension  for  life  payable  monthly  equivalent  to 
that  annuitA'.  to  be  paid  out  of  the  fund  contributed  by  the  county 
under  the  provisions  of  section  five,  {2)  B  (a). 

(b)  Pensions  based  upon  prior  service.  Any  member  of  the 
association  who  reaches  the  age  of  sixty  years,  having  been  in  the 
continuous  service  of  the  county  for  fifteen  years  or  more  immedi- 
ately preceding,  and  then  or  thereafter  retires  or  is  retired,  shall 
receive  in  addition  to  the  annuity  a  pension  provided  for  by  para- 
gi'aphs  (2)  B  and  C  (a)  of  this  section,  and  an  extra  i^ension  for 
life  as  large  as  the  amount  of  the  annuity  to  which  he  might  liave 
acquired  a  claim  if  the  retirement  system  had  been  in  operation 
at  the  time  he  entered  the  service  of  the  county,  and  if  accordingly 
he  had  paid  regular  contributions  from  that  date  to  the  date  of  the 
establishment  of  the  retirement  association  at  the  same  rate  as  that 
first  adopted  by  the  board  of  retirement,  and  if  such  deductions 
had  been  accumulated  with  regular  interest. 

Emjiloyees  who  had  alreadj'  reached  the  age  of  sixty  years  at  the 
time  the  retirement  system  was  established,  and  employees  who  had 
already  reached  the  age  of  fifty-five  years  at  that  date  and  also 
became  membei's  of  the  association,  may  he  retired  under  the  pro- 
visions of  the  preceding  paragraph  without  having  completed  the 
otherwise  required  service  period  of  fifteen  years.  For  the  purpose 
of  computing  any  jiension  payable  for  prior  service,  the  board  of 
retirement  may  estimate  on  the  basis  determined  by  them  the  wages 
received  at  any  period  for  which  they  may  deem  it  impracticable 
to  consult  the  original  records. 

D.  Application  of  Sur2:)liis.  —  The  board  of  retirement  shall  have 
power  to  determine  the  application  of  any  surplus,  as  defined  under 
section  four,  (6)  1,  subject  to  the  approval  of  the  insurance  commis- 
sion. 


374  OLD   AGE   PENSIONS.  [Jail. 

E.  Minimum  Payments.  —  In  no  case  shall  the  total  monthly 
payment  to  a  member  be  at  a  rate  less  than  two  hundred  dollars 
per  year. 

F.  Association  2Iemhership  and  Pension  Certificate.  —  Member- 
ship in  the  association  shall  be  evidenced  by  a  certificate  to  be  is- 
sued to  each  member  by  the  board  of  retirement,  and  the  right  to 
an  annuity  or  a  pension  shall  be  evidenced  by  a  policy  to  be  issued 
to  each  member  who  retires  or  is  retired  by  the  board  of  retirement. 

TAXATION,   ATTACHMENTS   AND   ASSIGNMENTS. 

Section  7.  The  funds  of  the  retirement  system,  so  far  as  they 
are  invested  in  personal  property,  shall  be  exempt  from  taxation. 

That  portion  of  the  wages  of  a  member  deducted  or  to  be  de- 
ducted under  this  act,  the  right  of  a  member  to  an  annuity  or  pen- 
sion, and  all  his  rights  in  the  fund  of  the  retirement  system  shall 
be  exempt  from  taxation,  and  from  the  operation  of  any  law  re- 
lating to  bankruptcy  or  insolvency,  and  shall  not  be  attached  or 
taken  u23on  execution  or  other  process  of  any  court.  No  assignment 
of  any  right  in  or  to  said  funds  shall  be  valid. 

SUPERVISION  BY  INSURANCE  COMMISSIONER. 

Section  8.  The  insurance  commissioner  shall  prescribe  for  each 
county  that  adopts  a  retirement  system  under  the  provisions  of 
this  act  one  or  more  mortality  tables  and  one  or  more  tables  repre- 
senting as  nearly  as  may  be  the  rates  of  withdrawal  of  employees 
from  the  service  of  the  county  for  reasons  other  than  death,  and 
shall  determine  what  rates  of  interest  shall  be  established  in  con- 
nection with  such  tables,  and  may  later  modify  such  tables  or 
prescribe  other  tables  to  represent  more  accurately  the  expense 
of  the  pension  system,  or  may  change  said  rates  of  interest  and 
may  determine  the  application  of  the  changes  so  made.  He  shall 
also  iirescribe  and  supervise  methods  of  bookkeeping  of  each  re- 
tirement association  formed  under  tjie  provisions  of  this  act. 

The  insurance  commissioner  shall  at  least  once  in  each  year, 
either  personally  or  by  deputy  or  assistant,  thoroughly  inspect  and 
examine  the  affairs  of  the  retirement  association  to  ascertain  its 
financial  condition,  its  ability  to  fulfill  its  obligations,  whether  all 
parties  in  interest  have  complied  with  the  provisions  of  law  ap- 
plicable to  the  association,  and  whether  the  transactions  of  the 
board  of  retirement  have  been  in  accordance  with  the  rights  and 
equities  of  those  in  interest.  The  retirement  system  shall  be  credited, 
in  the  account  of  its  financial  condition,  with  the  amounts  due 
from  the  county,  under  the  provisions  of  section  five.  (2)  B  (a), 
its  investments  with  fixed  maturities  at  amortized  values,  and  its 
other  investments  at  a  reasonable  valuation. 


1910.]  HOUSE  — No.  1400.  375 

For  the  purposes  aforesaid,  the  insurance  commissioner  or  other 
persons  making  examination  shall  have  access  to  all  the  securities, 
books  and  papers  of  the  retirement  system,  and  may  summon  and 
administer  oaths  and  examine  as  witnesses  the  members  of  the 
board  of  retirement  or  any  other  ])ersou  relative  to  the  financial 
atfairs,  transactions  and  conditions  of  the  retirement  system.  The 
insurance  commissioner  shall  preserve  in  a  permanent  form  a 
full  record  of  the  proceedings  at  such  examination,  and  the  results 
thereof.  Upon  the  completion  of  such  examination,  verification  and 
valuation,  the  insurance  commissioner  shall  make  a  report  in  writ- 
ing of  his  findings  to  the  board  of  retirement,  and  shall  send  a  copy 
thereof  to'  the  county  commissioners. 

Section  9.  If,  in  the  judgment  of  the  insurance  commissioner, 
the  county  or  the  board  of  retirement  have  violated  or  neglected 
to  com})ly  with  any  of  the  provisions  of  this  act,  or  of  the  rules 
and  regulations  established  by  the  board  of  retirement  hereunder,  he 
shall  give  notice  thereof  to  the  county  and  to  the  board  of  retii-e- 
ment,  and  thereafter  if  such  violation  or  neglect  continues  shall 
forthwith  present   the  facts  to  the  attorney-general  for  his  action. 

Section  10.  The  superior  court  shall  have  jurisdiction  in  equity 
upon  petition  of  the  insurance  commissioner  or  any  interested  party 
to  compel  the  observance  and  restrain  the  violation  of  this  act,  and 
of  the  rules  and  regulations  established  by  the  board  of  retirement. 

Section  11.     This  act  shall  take  effect  upon  its  passage. 


376 


OLD   AGE   PENSIONS. 


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1910.] 


HOUSE  — No.  1400. 


377 


icoM(M'»i^>naoi»  —  cooi-<i'«"'0«ic^iii5  0  0i    1    loooi       o 


I   C<3  CO -H  T)<  cq  ■*  lO    I   «'-<C^iO    1      I      I   ■>9>"5CJ    I   05    I    "*  cc  M    I      I      I   or~    1         -> 


I    I    I    I  M  I    I  «ro  I  CO  1  —on  i-Hi    1    i-Hicoi-Hlcoi    1    1    i-<i       ^ 


toilliiiiiiiit~iiilit^ii  o>e^  I    I    I  N  J    I    I    1    I 


usiiliililillteiliflMil  jje>j  I    I    I  <M  I    I    I    I    I 


..^lllllllllll—illlll-VIIOOIIIIIIIIII 


I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I  <£>  I    I  CO  I    :    I    I    I    I    I    I    I    I 


I      I      I      I      I      I      I      I      I      I      I      I      I      I      I      1      I      I    >o    I      I    -<    I      I      I      I      I      1      I      1      1      I 


I      I      I      I      I      I      I      I      I      I      I      I      I      I      I      I      I      I    »    I      I    IM     I      I      I      I      I      I      I      I      I      I 


tOlllllllllllt^lllllCOll    SJ^^     I      1      I    04     I      I      I      1      I 

C^  CO 


inillllillllioiliiioc 


I  iMC^   I    I    I  e^  I    I    I    I    I 


Z 
P 
O 

o 


.Hiiiilllllll'-lilli'niioilllllilll 


Mlllllllllll<Mlllll>ailaoillllillil 


«illlllliilicqiliil-*iie<illllllllll 


I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I  ^  I    I  <o  I    I    I    I    I    I    I    I    I 


•OIlllllllllllOlllllOCII   ^(M    I      1      I   c<>    I      I      I      I      I 


I      I      I      I      I      1      I      I      I      I      I   •*    I      I      I      I      I   ^    I      I   OIN    I      I      I   (M    I      I      I      I 


rHllllllirili-Hiiiii-<».ii-*iiiiiiilll 


378 


OLD   AGE   PENSIONS. 


[Jan. 


o 
o 

ij 
o 

CO 

« 


Outdoor  Relief, 

Town,  City 

AND  State,  for 

12  Months. 

•l^}ox 

C<I  »0  M -^  CC  C^  ^H  (M  CO  O  00  ^-l  C<l  CC  T**  ^H -.*«    1    00^-H 

i 

•J3A0  pUB  Oi 

-H  1,-5 —  MM—   1  trcMt^c^i  — <Mrocq  — -*  1  m  — 

"5 

CO 

•69  01  fi9 

—    1    —  — -H  — —  OO  —  CO^    1      1      1    !N    1      1      1    lO    1 

t^ 

a 

g 

o 
s 

a: 

S 
•J 
< 

z 

INMATES 
SEPT.  1,  1909. 

•IB}OX 

1    CO    1    CO— ICQC^»0    1    i«CCO^^    1    U5^HOC<1COCC 
00             ^*<  — '                                    c^ 

2 

•J8A0  put!  Oi 

1    ^H    1    CO— >CO(MC<I    1    10"«<CD^H    1    •*  ^H  CO  C<l  ^H  CO 
"5             (M                                          — 

E 

•69  01  S9 

1    O    1      1      1      1      1    CO    1      1    05-*    1      1    —    1    CO    1    (M    1 
CO                  ^H                                                         ^H 

DEATHS,  DISCHARGES 
AND  TRANSFERS 
FOR  12  MONTHS. 

■moi 

1    CO    1    —    1    —    1    to    1      1    OOO    1      1      1      1      1    (MtD(M 

T}4 

•J9A0  pnB  Oi 

1  —  1  —  1  —  1  o  1    1  com  1    1    1    1    1  c>»-*  — 

S 

•69  0}  99 

l(MIIIII=OI|lI5lllllll    IM  — 

o 
w 

TOTAL  INMATES 
AND   ADMISSIONS 
FOR  12  MONTHS. 

•HHOX 

1  OI  1  Tn  — Tticq-  1  m  — lo—  i  m  —  to ■* os >o 

CM               CD—                                        CM 

•JSAQ  puB  Oi 

I   CM    1    T*1— ITj*cqCM    1    U5t^— l-H    I    ■^-HCO'^O'^ 

r^          CO »— f                          »— < 

o 

1— 1 

•69  01  99 

1   t-    1      1     1      1      1    0>    1      1   •*•*    1      1   —    1    CO    1   ■*  — 
•*             CM                                          — 

i 

ADMITTED 

SEPT.  1,  1908,  TO 

SEPT.  1,  1909. 

•I^iox 

1    CO    1      1      1    "^S^J*    1      1    =0-*    1      1      1      1      1    COOOCM 

CO 

to 

■J3A0  pUB  Oi 

1    —    1      1      1    — CMCM    1      1    coco    1      1      1      1      1    CO-*- 

g 

•69  o»  99 

ICMIIlllCMIICO—    llllll-*  — 

CO 
CO 

S    . 

Z  H 

a 

•Rox 

1    CO    1    •*  — CO    1    f^    1    10>0  — —    1    lO  — CD  — —  CO 
00              IC  — <                                        CM 

o 

CM 

•J3A0  pUT!  Oi 

1    —    1    r»<  — CO    1    O    1    iO-*00—    1    -9<  — CO  — —  CO 
CO              CO                                              .— 1 

•69  01  99 

1   lO    1      1      1      1      1   t^    1      1   —CO    1      1   —    1   CO    1   O    1 
CM               CM                                              — • 

o 

2: 
o 

o 
o 

S 

Acushnet, 

Attleborough, 

Berkley, 

Dartmouth, 

Dighton, 

Easton, 

Fairhaven,    . 

Fall  River,    . 

Freetown, 

Mansfield, 

New  Bedford, 

North  Attleborough, 

Norton, 

Raynham,     . 

Rehoboth,     . 

Seekonk, 

Somerset, 

Swansea, 

Taunton, 

Westport, 

1910.] 


HOUSE  — No.  1400. 


379 


—  C<D    I    — •«    I    <M 


-<CO     I    -H     I      I      I 


I    I    I    I  e<5  I  IM 


I    I    I    I    I    I 


I    I    I    I    I    I    I 


I    I    I    I    I    I    I 


I    I    I    I    I    I    I 


I    I    I    I    I    I 


I   I   I    I   I   I    I 


IH 

z 
t> 
o 
o 

m 


I  I  I  I  I  I  I 


I  I  I  I  I  I  I 


I  I  I  I  I  I  I 


I  I  I  I  I  I  I 


I  I  I  I  I  I  I 


I  I  I  I  I 


I  I  I  I  I  I 


■if  5  s,.-*?.-:!   5 

cj  -  -  -  rr  t-H     o 
—  i£  ;^,  7  ^  —  i- 


.-H  C3  ^      ^a<  00  '— »  •-' 


io»c  I    1  o  I  coco.-"   I  co^coos  I  c<i^Hir3e»i  i    i  cs-*  i 


^^    I    CO    I      I      I    ^^00    I      I    t^--t^05    I      I    -H    1      I      I      I      1    CC»-t 


.-1     I    M     I      I      I    -HtO     I      I    M— <C<lt^    I      I    ^     I      I      I      I      I    M-^ 


■z, 

P 

o 
o 


1^1      1      I      I    (M    I      1^1    ^CQ     I      I      I      I      I      I      I      I      I      I 


COCO^     I       I    ^ 


I     I  ^    I     I     I     I  ^^    I  ^    I  oaco   I     I  CM    I     I     I     I     I     I     I 


w^OO^<CO    I   lOCOiOCO    I   OOCMOCO    I    ^^O    I   CO    I      I      I   c^co 
1-.        ^H  C^  CO        CO'<J«  »-•  "-^ 


OO^OOOfOI'^COCOCOI'^C^^'^'Ol'— iGOl      I      I      I      lOCO 
C^  CSJ        COCO  ^ 


eococo  I    I  ^  I  cfl  I    I  -^  I  »c-H  I    I  cs  I  CO  I    I    i  m  I 


5  c^  s  c~     ^ 


>.c 


<<3acaQt: 


§< 

o  o 
ZZ 


380 


OLD   AGE   PENSIONS. 


[Jan. 


Outdoor  Relief, 
Town,  City 

AND  State,  for 
12  Months. 

■Rox 

0:OC^05^^    1    -^COtM-H 

S 

o 

•J8A0  puB  Oi 

CO-H(MO-H     1    CC-H     1        1 

i 

•69  01  89 

TjliO    1    0>    1      1    rt(M(N.-H 

m 

a 
m 

Cj 
o 
X 

S 
-J 
■< 

Z 
^-1 

f 

<^ 
s    . 

Z  H 

-^  ft. 

•|B}OX 

COO    1    C<5    1    ■*    1      1      1    -H 

CO 
CO 

•J9A0  paB_[oi 

COO     1    C^^     1    ■*     1       1       1    rt 

53 

•69  o;  99 

t^     1       1    --     1       1       1       1       1       1 

o 

DEATHS,  discharges 

AND  TRANSFERS 
FOR    12   MONTHS. 

■^ox 

IM    1      1    ^    1      1      1      1      1    -< 

s 

•J9A0  POB  Oi 

CS    1      1    lO    1      1      1      1      1    —H 

s 

•69  Oi  69 

1      1      1    03    1      1      1      1      1      1 

CO 

TOTAL  INMATES 
AND   ADMISSIONS 
FOR  12  MONTHS. 

•lB»ox 

lOCO    1    t^    1    ■*    1      1      1    IM 
(M               to 

•jaAQ'pn'B  Oi 

OOtO    1    t^    1    •*    1      1      1    CM 
,-(              CO 

CO 

•69  01  99 

t~    1      1    O    1      1      1      1      1      1 

CO 

ADMITTED 

SEPT.  1,  1908,  TO 

SEPT.  1,  1909. 

•mox 

•*-H     1    O     1       1       1        1        1        1 

.-H 
r- 1 

MAQ  pUB  Oi 

CO-H     1    -H     1        1        1        1        1        1 

00 

•69  01  99 

^    1      1    CO    1      1      1      1      1      1 

s 

INMATES 
SEPT.  1,  1908. 

•F»ox 

-<>«  1  r-  1  •*  1     1     IP) 

S5 

CO 

•jaAQ'pnB  Oi 

iraira   1  CO  1  •*  1    1     IN 

■* 

s 

•69  01  S9 

to  1    1  ■*   1    1    1    1    1    1 

§ 

o 

Peabody, 

Rockport,     . 

Rowley, 

Salem, 

Salisbury, 

Saugus, 

Swampseott, 

Topsfield,      . 

Wenham, 

West  Newbury, 

0 

C 

o 


1    rt     I       I       I       I       I    TJICO 


-H     I      I      1      I      I    (MCVl 


I       I       I       I       I       I    IM-H 


I      1^1      I    CO    I      1 


I    CO    I      1    CO 


I      I    rt     I      I      I      I 


•I      I    -H    I      1      I      I      I 


I      I      I      I      I      I      I      I 


I      I    ^    I      I      I      I      I 


I      I   >o    I      I   CO    I      I 


I      I    CO    I      I    CO    I      1 


I      I    (M     I      I      I      I      I 


I      I    (M    I      I    1-1    I      I 


I      I      1      I      I    -<     I      I 


I    (M    I      I      I      I      I 


I      I    CO     I      I    M     I      I 


I      I    CO    I      I    IM     I      I 


I      I      I      I      I      I      I      I 


-  M^  2       '~ 
u=  d-^  t-  S  ^  "-•-    - 


1910.J 


HOUSE  — No.  1400. 


381 


•V   I     I  ^hc^   I  r^NMOSM-^   I  *-i--^occ 


n    I      I    — M     I    tC-HMCOC^l— <     I      I    rtCCCN 


«     I       I       I       I       I    -Hrt     I    M     I       I       1    «     I    t^  — 


U3^    I      I      I      I   -^    I      I      I      I      I   C^    I      I      I      I 


m^  I    I    I    I  09  I    I    I    I    I  <M  I    I 


I     I      I      I      I   04    I      I      I      I      I      I      I      I      I      I 


(N    I     I     I     I     I     I     I     I     I     I     I     I     I     I     I     I 


<M    I      I      I      I      I      I      I      I      I      I      I      I      I      I      I      I 


I    I    I   I    I   I    I    I    I    I    I    I    I    I    I    I    I 


t-«  I    I    I    I  -1  I    1    I    I    I  cq  I    I    I    I 


r-^  I    I    I    I  o>  I    I    I    I    I  o<  I    I    I 


I      I      I      I      I      I    <M    I      I      I      I      I      I      I      I      I      I 


I      I      I      I      I      I    C<l    I      I      I      I      I      I      I      I      I      I 


I    I    I    I    I  .H  I    r    I    I    I    I    I    I    I 


I     I     I     I     I     I   "H    I     I     I     I     I     I     I     I     I     I 


f-—  I    I    I    I  05  I    I    I    I    I  e<>  I    I    I    I 


-^    I      I      I      I    00    I      I      I      I      I    <M     I      I      I      I 


I      I      I      I      I      I    M    I      I      I      I      I      I      I      I      I      I 


P 

c 
O 

Q 


•*»<C<I     I    -hCS-*     I    ^H  .^  C4  cc  C4  CO     I    eO(M 


M(M    I    ^tOCq    I      I    «I^C«3-H    I      I    Ort 


(Mill  coc*  I  rt  I  lo  I  -He<3  1  tO'i 


(M  t-  -^ 


I       l-H|t-|        I       I       lOI        I        I       |-*l 


I       I        I50I       I       1       It^l        l-H|C»| 


1     I     imi     I     I     lioi     l-H|(-qi 


I    I     I     I  o   I     I    I    I  IM   I    I    I     I    I    I 


tOIC«5l>OI      1      1      1001      ICOIml 


WI(MltOI      I      I      ICOl      ItOIOS 


1      I^IOll      I      i      IMI      I      I      |-*l 


-Hl<MltOI      I      I      1001      l-Hl      I      1 


.-ii<Mi-Hi    I    I    r(Mi    i-^l    I    I 


I     I      I     I   US    I     I     I     I   to    I     I      I      I     I      I 


C4I      I      lUSI      I      I      l-<t<l      l(MIO>l 


Ji  9.—  —  ^^  i  >  C  O   u:3 


E  o 


eS  3.: 


C3 
02 


a 
5 

.5 


W 

o 
o 
CO 


382 


OLD   AGE   PENSIONS. 


[Jan. 


C 

o 

O 


P 
O 

Q 


^      a: 
2  j_o    . 

J  C  fc.  m 

as    ~x 

n;  >  ■*•  o 


^•3 


O      " 


■Rox 


•jaAQ  pn^  oi 


•69  0}  gg 


I     05     I       I     TUMi-H 


to  05 


•I«;ox 


■J3A0  pUB  Oi 


•69  0}  B9 


I  M  I    I  •>«<  I    I 


to 

2  S  w 

oi  M  M 

a  ?  ^ 

i|§ 

'^  Oi,v, 

as  Q  Qj 
5  2° 

-<    -<    B^ 


•mox 


•J8A0  puB  Oi 


•69  o;  S9 


I   t-    I      I   CO    I      I 


I    t^     I      I    <M     I      I 


O    I      I    rt    I      I 


S  z  " 
5  to  g 

1  a  o 

2  s  s 

3: 


2n 


.J 
-< 

g    Q   « 

S  2  P 

t^  ^  fa 


•1B}0X 


•J3A0  pnB  Oi 


•69  o;  S9 


o 

QOOS 

ao2 


£  a 
a  =° 

CO 


■mox 


•J8A0  pm  Oi 


•69  0^  59 


I  r-  I    I  05  I     I 


S    . 
Z  H 

a 


■ITi^ox 


•aaAQ  puB  Oi 


•69  0?  B9 


o 

o 
o 


I    05     I       I    ■*     I       I 


2 
I'll  J^l 

tl-r  — 5^  CO  coi: 


.S  <u 


O  &  P 

mm 


H^^^^ 


I    M    I      I    IC    I      I  -* 


.a 

O 


P 
o 
o 

K 
W 
111 

< 


^^'-t     1     t^     I     C^  ^H      I     ,-H      I     CM 


y-AT^     I     CD     I    CM  1-H     I    .-<     I    CM 


I        I        I     '-H     I        I        I        I        I        I        I 


■*CO.-(     I    CO     I      I      I      1      I      I 


COCM-H     I    C<3     I      I      I      I      I      I 


'-I—     I      I      I      I      I      I      I      I 


I    ^    I      I      I      I      I      I      I      I      I 


I    'I     I      I      I      I      I      I      I      I      I 


I      I      I      I      I      I      I      I      I      I      I 


iTXrt     I    CO    I      I      I      I      I      I 


eoco-^  I  CO  I    I    I    I    I    I 


■-l-H      I        I        I        I        I        I        I        I       I 


I  -<  I    I    I    I    I    I    I    I 


I    I    I    I    I    I    I    I    I    I    I 


I    'H      I        I        I        I        I       I        I        I       I 


TJICOt-1    I   CO    I      I      I      I      I      I 


COCO<-l    I    CO     I      I      I      I      I      I 


I    I    I    I    I    I    I    I 


•  -     --  c 

S  S  S'?  c3-a  eg"?  >i-T; 
c  a)x:  3  cs  c  o  E  £■  cs^ 

<ffluuwaoooKW 


1910.] 


HOUSE  — No.  1400. 


383 


I    I  t^co  I    I     I     I  r~  I  CQ'^" 


I     I   30-^    I     I     I     I   « 


I    I  ose>j  I    I    I    I  •*  I  .^« 


T-l-S"!      I      I      IC^CJI      I      I 


rt   I  -^i   I     I     I     I  040   I     I     I 


I    I    I    I    I    I    I    I    I    I    I    I 


I    I  t-  I    I    I    I  -H  1     I    I     I 


I     I  ■*    I     I     1     I  -H    I     1     I     I 


I    I  n  I    I    I    I    I    I    I    I    I 


-i    \    —    I      I      I      I    C<5<M    1      I      I 


>H    I   00    I      I      I      I   CO(M    I      I      I 


I      I    CO    I      I      I      I      I      I      I      I 


I      I    (M    I      I      I      I      I      I      I      I      I 


I  O    I     I     I     I     I     I     I     I     I 


I      I    C4     I      I      I      I      I      I      I      I      I 


.—     I    3)     I      I      1      I    «>0)     I      I      I  O 


•H    I  00    I     I     I      I  CO<M    I      I      I 


I     -H      I        I        I        I        I        I        I        I       I 


="    .    .    .  S"  >"    .  =  i  - 

c_-2           2=     5  =  3 
|l|4:ftl    III 

3 

0 

Hun 

Mid. 
Nort 
Pelh 
Plaii 
Pres 
Sout 
Sout 
War 
Wes 
Will 
Wor 

12; 

o 
O 

H 

a 
o 


m!N    I    (Mir>    1    0005—    I    IMIM    I    --(M    I    t^  ■>*  M  CO  US  O 


C^  O     I      I    -^     I    C^iO     I      I    CO*^    !    ^HC<I     1    »M  •»*<  — -H  »0  t^ 


i-<0    I    Ni-H    I    .-ITd—    I    05>-l    I      I      I      I    "5    I    e^<N.-"C» 


•  CO    I      I      I    COlO  t~-00O» 


I      I      I      I      I      I      I      I      I      I    t^lMCO.^     I      I      I    •^,-^^■V    1 


1      I      I      I      I      I      I      I      1      I    ■*    I    -HCO    I      I      I    —  — -H.H    I 


I      I      I      I      I      I      I      I      I      I    --<    I    -<CO    1      I      I      I      I    '-I    I      I 


I        I        I       I        I       I       I        I        I     CO     I       I       I        I       1        I    T-l-H      I     —     I 


(M    I    — CQ    I    —    I    "-1    I      1    l«CO0O«5    I      I      I    •^tO0OO>O» 


C^      I     ^HCQ      1     ^H      I     T-H      I        1     lO»-HlO»C     1       I        I    OS'^r^'^Oi 


I    I    I    I    I    I    I    I    I    I  oeaco-H  1    I    I  lOiMrtio  i 


I    I    I    I    I    I    I  —  I    I  o  I  iM<-i  I    I    I  •<tico  I  eo<-H 

C4 


I        I       1        I        |-H|        |>0|-H—     I        I        I        INI<M-< 


I    I    I    I    I    I    1    I    I    I  •*  I  -H  I    I    I    I  ■*—  I  rt  I 


e-j    I    rtIM    I    —    I      I      I      I    O  —  '*-*    I      I      I    OSC^t^lMOO 


itsz, 


384 


OLD   AGE   PENSIONS. 


[Jan. 


Outdoor  Relief, 

Town,  City 

AND  State,  fob 

12  Months. 

•P»01 

1     -H 

1    g&^'^^"'2j3    1    ■*"'    '    "MCOM    1      1    IN-H    1    lOOOON 

•jaAQ  puE  0/. 

1     rt 

1    OJ  00  O  ^H  CS  »0  00  CQ    1    ■^■^    1    C^iOCO    1      1    C^^H    1    c^inzD    1 

•69  <n  99 

1    1    1  rt05t^  1  CO  1  NO  1    1  -H  1    1  00  1    1    1    1    1    1  e^iocqiM 

g 

S 

.J 
< 

inmates 
SEPT.  1,  1909. 

•F)ox 

>o   1 

[    O  OQOCOOSlOtM  CO    1    OOi-HCN    1    t^  lO  (M  »-H  (M -^    1    OS  O  I^  CO 

•J3A0  pUB  Oi 

■*  1 

1   O  I-- -H  CO  t^  lO  t- -H    1   <0    1   (N    1   ■*  U5  ,-1 -H  t-l  ■*    1    if5Cq-*<M 

•69  0}  Q9 

,-4      1 

1    »OCOt^    1    C^    1    U^C^    1    C^-H    1      1    CO    1    ^H    1    ^H    1      t    -TfOOCO^H 

DEATHS,  DISCHARGES 
AND  TRANSFERS 
FOR   12  MONTHS. 

•mox 

1  1  1  E-rt<N  1  COCONCO  l,-i|  1  I  •«  \  1  1  |,-l|  1  |(M1 
00 

■J3A0  pUB  Oi 

1    1    lc-j|,-i|e<iiMiiMi    1    1    1    icol    1    1    i-h:    I    |(Mr 

•69  0?  S9 

1    1    1  in-Hrt  1  rt,^(M^  1  rt  1    1    1  »  1    1    1    1    1    1    1    1    1    1 

CO 

TOTAL  INMATES 
AND  ADMISSIONS 
FOR  12  MONTHS. 

■F^oj, 

ira  1 

1  t^-Hococqoo-^o  1  os^Hc^i  1  ^H  lo  c^  ,-t  ca  »o  1  osoosco 

•J8A0  pnB  Oi 

■*  1 

1  t^  t~  (M  CO  Oi  t^  t^  CO  1  o  1  c-q  1  t^>ort-H,-<io  i  uje^ioe^ 

•69  0}  S9 

-H     1 

I    O-^OO    1    CO,-tt^CO    i    CO^H    1      1    rfH    1    ^H    I    T^    1      |    -^  00  CO  r-* 

ADMITTED 

SEPT.  1,  1908,  TO 

SEPT.  1,  1909. 

•F^ox 

1    1    1  loeom  1  -^coNrt  i  n  i    i    i  th^-i-h  i    i  im  i  ^  i  eq  i 

•J8A0  pUB  Oi 

1     1     lc<ie<>coi(McO'-i-H|e>)|     i     |T»<rt-^i     |c^i-h|-<| 

•69  0?  59 

IIICOIO)l(M|.-4|lllllllllllll|.-l| 

is 

s    . 

CO 

•I«?ox 

"5    1 

1  ca 05 lO CO 00 lO c<i >«  l  t^^cq   i  i:^-*rtrt(Nco  1  ooot^co 

CO   .-H   ,— (                                  T-t  ,— ,                                                       T-,                                                                            Cq 

•J8A0  pnE  Oi 

■*  1 

1  ic  in  OS  CO  r- ■*  JO  ej  i  ■*  i  (M  i  co'*  i  -h^co  i  -^c^ioc^i 

•69  0*  fi9 

^  1 

1    t^-*i«    1    -H«tOCO    1    CO-H    1      1    'il    1    -1    1    rt    1      1    ■♦OOCM-H 

2 

Lexington,    . 

Lincoln, 

Littleton, 

Lowell, 

Maiden, 

Marlborough, 

Maynard, 

Medford, 

Melrose, 

Natick, 

Newton, 

North  Reading, 

Pepperell, 

Reading, 

Sherbom, 

Shirley, 

Somerville,   . 

Stonehain,     . 

Stow,   . 

Sudbury, 

Tewksbury, 

Townsend,     . 

Tyngsborough, 

Wakefield,     . 

Waltham,      . 

Watertown. 

Way  land, 

1910.] 


HOUSE  — No.  1400. 


385 


1 — 2S 

O 
S 

1      1      1   ^t;^ 

i 

1    r^r^r^:0 

s 

-HiMPJ  1  e^ 

CD 

r  «N  1  n 

i 

^—  I    1  o» 

t    1  T^  1  r^ 

1    1  -<  1  >o 

s 

1      1      1      1   (N 

!0 

«e<ico  1  OS 

i 

1  — eo  1  00 

o 

2 

..<  1  -^  1  •* 

1      1   -<    1   CO 

s 

-H     1       1       1    rt 

s 

1   MC^    1   U5 

s 

■^ 

1  ^N    1   U5 

s 

1   —    1      1   O 

1.H 

5 

o 


O 

o 

o 

H 

?; 


S      o 
S     H 

a 

03 


Txc<5«OM  I  oo.^a;t^(Mto  i  to co lo m -h •* m 


H 

p 
o 
o 


o 

o 


cqc^.^'.**oo   I  ■.*<  ^H lo  PO c^ c^   I  T*< CO C4 cc *-H ro ^H 


M— <    I   NTji    I   -at    I   ^^    I   T(<    I    (M    I   COCJ    1   rt« 


I  -^  ■^  00 -.*<  !0 1^   1     I  r^   1     I  c<i  CO   I  »o   I     I     I    I 


N^!OC0'*Tt<    1      I    ■*     I      I    -^Tfl     I    >o    I      I      I      I 


I    <N     I    (N-H(MCO    I      I    CO    I      I    -H«    I      I      I      I      I      I 


I    rtrt     I    (Mrt..<    I      I      I      I      I    .-"i-l     I    -H    I      I      I      I 


I    rtrt     I    (Mrt     I      I      I      I      I      I    rt-H    I    rt    I      I      I      I 


I        I        I        I       I     'H      I        I        I        I        I        I        I        I       I        I        I       I       I 


I  m«ooo<ct^oo  I    I  t~  I    I  cot-  I  to  I    I    I    I 


I   ffOtOCOkOU?-^    I      I   -^    I      I   C4^    I    CO    I      I 


I    (M     I    (M.-'INTtI    I      I    CO     I      I    -HM     I      I      I      I      I      I 


I      I    C4(N(M     I    C4     I      I      I      I      I    '-H     I      I      I      I      I      I      I 


I      I    C^-H(M     I      I      I      I      I      I      I    -H     I      I      I      I      I      I      I 


I      I      I    .-I     I      I    IM     I      I      I      I      I      I      I      I      I      I      I      I 


I   lOCOtOVr^tO    I      I   t^    I      I   <Mt-    i   to    I      I      I      I 


I    COCOiCCO^O-^     I      I    ■<»*    I      I    i-^iO    I    to     I      I      I      I 


I  e*  I  -Hrte*M  I    I  CO  I    I  -HCii  I    I    I    I    I    I 


386 


OLD   AGE   PENSIONS. 


[Jan, 


^; 
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P 
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§ 

►:) 


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e<i(N»e<5.-i  I    I  ^  I  ■* 


I   (M05    I   "-im    I  C<5C<3'* 


I   i-cto    I   ^U5    I   (MCOtJI 


I    t-CCO    1      I      I      1  i-<    I 


I   »-l^    I      I      I      I      I    t-Ht-i 


I    i-l    I      I      I      I      I   »-lrt 


I     'H     I        I       I       I       I       I       I       I 


1    .-<t^     I    rHlffl     I    (MT11U5 


I  caeo  I    I    I    I  rt  I 


I    I  ■>*  I    I    I    I    1    I  1-1 


I    T»4     I      I       I       1      I       I    ^ 


I    I    I    I    I    I    I    I    I 


I  coco  I  <-iio  1  eo-*-* 


I    ^  M    I    1-1  "5    I    (M  ■*  ■« 


I    IMCO    I      I      I      I    -M    I      I 


«  5  d 

O  S  Q 


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•-".—  O  (-1  Li  cO"^  J  z3  O 


1910.] 


HOUSE  — No.  1400. 


387 


!0 
S3 

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1^1      1     1     1   •«    1      1   tD-<—    1   INOS    1   t~ 

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1    1    1    1  N  cq  00  p*  ■*  t~-  1    1  «o  1  toco  1 

1     1      1     1  MNOOCJMO    1      1   >0    1   Ol-H    1 

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1         1         1         1         1         1         1         1     T^'*       1          1      .^       1     ■«01       1 

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IC  32    I   00 


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388 


OLD   AGE   PENSIONS. 


[Jan. 


B  5-"  ■<  '^ 

»     2 
o     " 


•mox 


•aaAQ  pnt!  oi 


•69  o?  S9 


I  ooM  I    I  rtcX)-Hco  I  -^ooe^N  I  'H 


I    coco     I      I    -HU3     I    (M     I    OOe<l(M     1    rt 


l>01      I      I      ICOrt^l-*NI      I      I      I 


1-H     I    t>- ^^  C^  lO  CO  *-<  CO 


-M     I    lO  ^H  ,-H  ■^  CO  ^H  CO 


1        I     N     I     «.-!     1       I 


•^ox 


•jaAQ  pnB  Oi 


•69  o^  99 


CO    I    <C»-<    I    t~-CO    I 


I    CO    I      I    Tj<05— 1^>-1    I    05tX5COIMrt    I 


(N     I    'K-H     I    (MCO    I 


I  Tti   I     I     I  ■*■*   I     I     I  co"5eo-H   I     I 


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H  ti^    H 

Cd  ^  z 

S  Q  Bj 

5  5° 

<  -<  fa 


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•69  o^  fi9 


I      I      I      I      I      I    CQ     I      I      I    Oi-H     I      I      I 


I      I      I    CO     I    tD<M     I 


I      I      I      I      I    <M     I      I      I    -Hrt     I      I      I      I 


I      I    CO    I    -"I'M 


I      I      I      I      I      I      I      I      I    O     I      I      I      I      I 


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I  ^  1    I    I  "*•*  I    I    I  ooinco— H  I    I 


I  e<«  I    I  t^  I    I 


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•J8A0  pnB  Oi 


•69  <n  89 


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I      1      I    CQ    I    CO    I      I 


I    -H     I      I      I      I    CO     I      I      I    -HIM     I      1      I 


I      1      I    IM     I    <N     I      I 


I      I      I      I      1    -H     I      I      I      I    IM^tH     I      I      I 


I      I      I      I      I    ^     I      I 


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a    . 

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•I^jox 


•J9A0  pnE  Oi 


•69  o?  S9 


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I    CO    1      I    •<*<  05  »-<  f-l -H     1    Oi  t-- CO  C^  T-t     I 


C<1     I    -"UN     I    •*  "3     I 


I    •*     I      I      I    CO-*     I      I      I    0-*IM--    I      I 


-H   I  IM   I     I  as   I 


•Cm 

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__„^ .. _..  „  „„__       :.-<uo 

mpQa3P3caooQQQfeC!OffiW!i!WWH3iJiJiJSSS^;lz; 


Q        H  «   - 


bO 


^-P  fi!r,  m  3 


S^o  o  C.C3  3  o  a.ti  5  2  cs^  o  o  d  S'S  S  5  » 


1910.] 


HOUSE  — No.  1400. 


389 


noi- 

<Ti< 

CO 

»_ 

<     1    Ol     1    « 

tT  -h 

—  ust^e^coiM 

c^-a" 

in 
t* 

1    1 

1 

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o 

CO 

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<  1  e^>  1  CO 

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^- CO  b*  cot*  CO 

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to 

1    1 

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1  to 

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t>- CO  oa  CO  t*  CD 

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Oakham, 
Oxford, 

Paxton,' 
Petersham,   . 
Phillipston,  . 

1 
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Rutland, 

Shrewsbury, 

Southborough 

Southbridge, 

Spencer, 

Sterling, 

Sturbridge,   . 

Sutton, 

Templetoii,   . 
Upton, 
Uxbridge, 
Warren, 
Webster, 
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Winchendon, 
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390 


OLD   AGE   PENSIONS. 


[Jan. 


O 

M 

n 

Ph 
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00 

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o 

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o 
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1        «         .^ 

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c   »-• 

t~ 

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LUSIVE  0 
ANSFERS 

SO 

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<N 

T3     . 

r¥ 

C   t-. 

«« 

IM 

cq 

go 

1 

•a    . 

Deaths,  Dis- 
charges AND 
Transfers  fo 
12  Months. 

c  h 

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CO 

C3  g 
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t9   ? 

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1910.] 


HOUSE  — No.  1400. 


391 


P 
O 

o 

X 

CO 
CO 

W 


00      t-     'S'      CO      into      "5      e^M      too      '*J£      coco      S^S 


tc      t~     iM     eo     eoco     lO     ^-^     ■^t~     ■>»'«     ««o     ;*2t2 

1—i  CQ  '^  *"*  ^^  ^^ 


00     t—     ^     TO     "Oto     to     ioe<5     50»H     005O     cor-     S2525 

tH  c<  .-H  c^  .— t  CV|.-<CX 


«o      t-      (M      CO      eoeo      to      co<m      ■*oo      coco      cot-      SE:E£ 

,-1  C^  ^-{  1-i  1^  C^  ^H  1— I 


I       I       I       I       I    I 


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-H  C^  -H  (M  T-l 


cq       CO      coco      O      COC^      ^00      ooco      cot—      ^E*22 

.—I  M  .-^  I""  1"^  CN.— '^^ 


I         rt       ^H  I         ■*    I         .-<        .-IC^        CO    I         — "C^  I      1         -<co« 


I  rt  I  I  -a<     1  T^  I    IM         (M     I  -X-H  1      I  -HCqrt 


00     to      CO      CO      —to      in     ■«■— '     co-H      t--*      cot^      S!2S! 

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HOUSE  — No.  1400. 


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1910.] 


HOUSE— No.  1400. 


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396  OLD   AGE   PENSIONS.  [Jan. 


Appendix  D. 


LEGISLATION  RELATING  TO  TEACHERS'  PENSIONS. 


No  special  investigation  of  the  subject  of  teachers'  pensions  has 
been  made  by  this  commission.  This  subject  was  not  regarded  as 
within  the  strict  limits  of  the  commission's  province  of  inquiry, 
according  to  the  apparent  intent  of  the  Legislature.  The  following 
report  concerning  the  present  status  of  retiring  allowances  for 
public  school  teachers,  transmitted  to  the  commission  by  the  secre- 
tary of  the  Carnegie  Foundation  for  the  Advancement  of  Teaching, 
embodies  recent  information  on  this  question.  It  should  be  observed, 
however,  that  this  report  does  not  cover  the  legislation  of  1908  and 
1909. 

Mention  should  be  made  here  of  the  veto  of  a  teachers'  pension 
bill  in  Wisconsin  in  1909.  The  bill  as  passed  by  the  Legislature  was 
vetoed  by  Governor  Davidson  on  the  ground  of  unconstitutionality. 
The  bill  provided  for  the  creation  of  a  teachers'  retirement  fund  by 
an  assessment  of  1  per  cent,  annually  upon  the  salaries  of  the  teach- 
ers. All  teachers  commencing  to  teach  after  September  1,  1909, 
were  to  be  compelled  to  contribute  to  the  fund.  Teachers  who  had 
begun  teaching  before  that  date  might  elect  to  take  advantage  of 
the  provisions  of  the  act,  if  their  past  service  did  not  exceed  twenty- 
five  years,  by  paying  an  amount  equal  to  1  per  cent,  per  annum 
of  the  salaries  received  during  their  past  service.  The  largest  pen- 
sion was  to  be  $300,  payable  to  teachers  who  had  served  for  twenty- 
five  years.  Pensions  smaller  in  amount  were  provided  for  teachers 
with  shorter  periods  of  service,  down  to  fifteen  years.  The  main 
reason  for  the  veto  of  the  act,  as  stated  by  the  Governor,  was  grave 
doubt  concerning  the  constitutionality  of  appropriating  money  from 
the  general  fund  of  the  State  for  the  payment  of  pensions  in  the 
manner  proposed.  "  The  question  of  the  constitutionality  of  the 
act,"  said  the  Governor  in  his  veto  message,  "  has  been  considered 
by  the  Attorney-General,  at  my  request,  and  he  has  given  his 
opinion  that  those  features  of  the  act  which  apply  to  teachers  not 
engaged  in  teaching  at  the  time  it  will  take  effect  are  unconstitu- 
tional and  void,  on  the  ground  that  in  such  a  case  the  annuity 
provided  becomes  a  mere  gratuity,  the  giving  of  which  is  not  au- 


1910.]  HOUSE— No.  1400.  397 

thorized  by  the  constitution,  since  the  principle  is  uniformly  rec- 
ognized that  tlie  power  to  tax  must  be  for  a  public  purpose  only. 
It  seems  to  be  conceded,  by  those  capable  of  passing  judgment  on 
that  matter,  that  so  far  as  this  act  undertakes  to  give  this  annuity, 
based  on  past  services  of  a  teacher,  it  cannot  be  sustained."  The 
Governor  further  quotes,  from  the  opinion  given  by  the  Attorney- 
General,  the  following:  "Notwithstanding  the  holding  of  other 
courts,  it  may  be  doubtful  whether  or  not  the  purposes  of  the  bill, 
laudable  as  they  may  be,  would,  in  the  judgment  of  our  supi'eme 
court,  justify  the  a])]iro]jriation  out  of  the  general  fund  of  the 
State,  which  is  raised  by  taxation." 


Retiring  Allowances  for  Public  School  Teachers. 

State  Systems. 

In  two  States  of  the  Union,  New  Jersey  and  Maryland,  there 
are  retiring  allowance  systems  administered  by  the  State  and  open 
to  all  teachers. 

The  Retiring  Allowance  System  of  New  Jersey.  —  This  consists 
of  two  funds:  first,  the  State  retirement  fund;  and  second,  the  local 
service  fund. 

First.  —  The  State  retirement  fund.  This  fund  is  administered 
by  a  board  composed  of  three  appointees  of  the  Governor  of  New 
Jersey,  and  three  members  elected  by  the  State  Teachers'  Association 
and  the  superintendent  of  public  instruction,  ex  officio.  All  teachers 
in  the  public  schools  of  New  Jersey  are  compelled  to  associate  them- 
selves in  this  fund.  A  teacher  of  less  than  ten  years'  seixice  con- 
tributes to  the  fund  2  per  cent,  of  his  or  her  salary;  a  teacher  of  a 
service  between  ten  and  fifteen  years  contributes  214  per  cent.; 
and  a  teacher  of  more  than  fifteen  years  contributes  3  per  cent. 
The  contribution  is  not,  however,  to  exceed  $50  per  year.  A  teacher 
who  is  incapacitated  after  twenty  years'  service  may  be  retired  upon 
three-fifths  of  the  average  salary  of  the  last  five  years;  minimum 
retirement,  $250;  maximum  retirement,  $650.  Teachers  leaving  the 
New  Jersey  public  schools  lose  membership  and  receive  no  indemnifi- 
cation therefor. 

Second.  —  The  local  sei-vice  fund.  Each  local  board  of  education 
is  compelled,  out  of  the  local  school  funds,  to  pay  a  retiring  al- 
lowance to  a  teacher  who  has  taught  thirty-five  years  in  the  public 
schools  of  New  Jersey,  and  twenty  years  in  the  schools  of  the  local 
board  of  education  paying  the  allowance.  The  allowance  is  to  be 
one-half  of  the  average  salary  for  the  last  five  years.  No  assessment 
is  permitted  ujion  teachers.  Both  of  these  funds,  the  Commonwealth 
and  the  municipal,  were  entirely  remodeled  by  law  of  1908. 


398  OLD   AGE   PENSIONS.  [Jan. 

The  Retiring  Allowance  System  of  Maryland.  —  A  teacher  having 
twenty-five  years  of  service  and  being  sixty  years  of  age,  who  "  by 
reason  of  physical  or  mental  disability  or  infirmity  is  unable  to  teach 
longer,"  may  be  j)laced  upon  "  the  teachers'  retired  list "  by  the 
State  board  of  education,  upon  the  recommendation  of  any  board 
of  county  commissioners.  The  applicant  "  must  be  without  com- 
fortable means  of  support."  The  State  board  of  education  shall 
certify  such  action  to  the  comptroller  of  the  State  treasurer,  who 
shall  thereupon  issue  his  warrant  to  the  State  treasurer  for  the 
payment  to  every  such  retired  teacher  of  $200  per  annum  from 
the  State  treasury.     (Law  of  1902,  as  amended  in  1906.) 

State  Laws  permitting  Local  Retirement  Funds  for  Teachers. 

The  States  of  Ohio,  Illinois  and  California  have  passed  acts  au- 
thorizing the  local  school  authorities,  if  they  see  fit,  to  create  teach- 
ers' retiring  funds.  In  Ohio  these  laws  give  such  authority  to  all 
school  districts,  in  California  to  all  cities,  in  Illinois  to  the  boards 
of  education  of  cities  having  a  population  exceeding  100,000.  A 
similar  authority  has  been  given  by  the  Legislatures  of  Massachusetts 
and  Rhode  Island  to  the  boards  of  education  of  Boston  and  Provi- 
dence, respectively.  In  Michigan,  also,  certain  cities  may  create 
funds ;  and  in  the  State  of  New  York,  the  cities  of  New  York,  Buffalo 
and  Poughkeepsie  are  given  a  similar  authority.  The  State  of 
South  Carolina  has  permitted  the  city  of  Charleston  to  create  a  re- 
tirement fund  by  compulsory  assessments  upon  all  teachers.  The 
Illinois  law,  originally  mandatory  upon  the  local  authorities,  is  by 
amendment  now  only  permissory.  The  Ohio  law  originally  provided 
for  a  compulsory  withholding  of  a  percentage  of  all  teachers'  sal- 
aries; but  this  provision  was  declared  unconstitutional  by  the  Ohio 
supreme  court,  upon  action  by  the  school  teachers  of  Toledo.  The 
sui^reme  court  of  Minnesota  declared  unconstitutional  the  act  of 
the  Minnesota  Legislature  creating  a  retirement  fund  by  such  com- 
pulsory assessments  in  the  city  of  Minneapolis. 

New  York.  —  City  of  New  York.  The  retirement  fund,  first,  con- 
sists of  certain  fines  inflicted  upon  teachers  for  absence,  whether 
absence  is  due  to  illness  or  any  other  cause;  and,  second,  of  5  per 
cent,  of  all  the  moneys  raised  in  the  city  of  New  York  by  the 
State  excise  licenses  granted  to  sell  spirituous  or  malt  liquors.  The 
fund  may  also  receive  donations,  legacies  and  gifts.  It  is  ad- 
ministered by  the  board  of  education,  and  is  applicable  only  to 
teachers  65  years  of  age,  whose  term  of  teaching  has  been  thirty 
years,  twenty  of  which  at  least,  have  been  spent  in  the  public 
schools  of  New  York  City.  In  normal  schools  the  teacher  needs 
only  to  have  taught  ten  of  the  thirty  years  in  New  York  City. 
Teachers  in  charitable  or  correctional  institutions  controlled  by  the 


1910.]  HOUSE— No.  1400.  399 

city  are  also  eligible.  The  applicants  must  be  recommended  by 
the  city  superintendent,  of  schools  and  the  vote  in  the  board  of 
education  must  be  carried  by  a  two-thirds  majority.  The  board  uses 
its  discretion  in  all  cases,  including  the  amount  of  the  allowance, 
although  one-half  the  last  salary  is  the  rule.  The  board  can  use 
both  principal  and  interest,  if  it  sees  fit.  The  fund  amounts  now 
to  about  $300,000,  and  it  seems  doubtful  if  the  interest  on  this 
would  be  sufficient  to  grant  allowances  to  all  who  could  receive 
them. 

City  of  Poughkeepsie.  The  retirement  fund  consists,  first,  of  2 
per  cent,  of  the  salaries  paid  to  all  the  teachers,  deducted  from 
their  salaries  monthly;  and,  second,  of  all  money,  pay,  compensation 
or  salary,  or  any  part  thereof,  forfeited,  deducted  or  withheld  for  or 
on  account  of  absence  from  duty  for  any  cause.  (Law  of  1902.) 
Authority  is  also  given  to  receive  donations,  legacies,  gifts,  and 
bequests. 

Ohio.  —  Local  authorities  in  any  school  district  may  create  a 
retiring  fund,  which  shall  consist  of  an  assessment  of  $2  a  month, 
or  $20  a  year,  upon  the  salaries  of  all  such  teachers  as  signify  their 
willing-ness  to  join.  Such  teachers  are  alone  eligible  for  retirement. 
The  teacher  may  retire  after  twenty  years  of  teaching  in  Ohio, 
provided  three-fifths  of  such  teaching  has  been  spent  in  the  service 
of  the  local  district  or  county '  distributing  the  fund.  The  amount 
of  the  allowance  is  $10  a  year  for  each  year  of  service,  but  is  never 
to  exceed  $500  a  year.  Both  the  principal  and  interest  of  the  fund 
may  be  used.  A  teacher  resigning  may  claim  one-half  of  the  sum 
paid  by  him  or  her  into  the  fund. 

California.  — City  of  San  Francisco.  The  fund  consists,  first, 
of  $12  a  year  deducted  from  each  teacher's  salary,  and  $6  from 
evening  school  teachers  receiving  less  than  $50  a  month;  and, 
second,  not  less  than  half  of  sums  forfeited  by  absence  from  duty. 
The  fund  is  administered  by  a  commission  consisting  of  the  mayor, 
the  superintendent  of  schools  and  the  county  treasurer.  A  retire- 
ment committee  of  five  teachers,  one  at  least  from  primary  grades 
and  grammar  grades,  recommends  applicants.  Applicants  must 
have  paid  assessments  for  thirty  years.  An  annuity  of  $50  a  month 
is  paid,  with  a  proportionate  annuity  to  incapacitated  teachers  who 
have  been  assessed  for  five  years. 

South  Carolina.  —  City  of  Charleston.  The  fund  is  made  up  of 
1  per  cent,  compulsory  assessment  upon  all  teachers'  salaries.  The 
retiring  allowance  is  $250  a  year,  given  only  to  those  who  impera- 
tively require  it. 

Michigan.  —  City  of  Detroit.  The  fund  consists,  first,  of  assess- 
ments upon  teachers'  salaries,  ranging  from  1  per  cent,  to  3  per 
cent.;  second,  of  fees  of  non-resident  pupils;  third,  of  interest  on 


400  OLD   AGE   PENSIONS.  [Jan. 

daily  balances  of  money  appropriated  for  teachers'  salaries;  fourth, 
all  moneys  deducted  from  teachers'  salaries  for  absence  or  any  other 
cause,  —  income  from  this  source  to  cease,  except  by  two-thirds  vote 
of  the  Board  of  Education,  when  the  fund  amounts  to  $100,000. 
The  fund  is  in  the  hands  of  a  board  of  trustees,  consisting  of  the 
president  of  the  board  of  education,  the  president  pro  tempore  of 
the  board,  the  chairman  of  the  committee  on  teachers,  the  super- 
intendent of  schools,  and  three  teachers  elected  by  contributors  to 
fund,  on  teacher  elected  each  year.  This  board  recommends  to  the 
board  of  education  the  amount  of  the  assessment.  Teachers  are 
eligible  who  have  taught  thirty  years,  twenty  of  which  shall  be  in 
public  schools  of  Detroit.  Twenty-five  years  of  teaching  alone  in 
Detroit  will  also  give  eligibility.  By  two-thirds  vote  of  the  trus- 
tees, incapacitated  teachers  of  twenty  years'  service,  ten  of  them  in 
Detroit,  are  eligible.  The  allowance  shall  not  exceed  $250  per 
annum.  Teachers  resigning  or  being  removed  from  service  may 
receive,  at  the  discretion  of  the  trustees,  not  more  than  one-half 
of  their  contributions. 

Massachusetts.  — Ciij  of  Boston.  The  fund  is  composed  of  $3 
withheld  from  teachers'  salaries  each  alternate  month.  It  is  in 
custody  of  a  board  of  trustees,  consisting  of  the  superintendent  of 
schools,  ex  officio,  three  male  and  three  female  teachers  elected  by 
teachers,  and  three  members  of  the  school  committee  elected  by  the 
committee.  To  be  eligible,  a  teacher  must  have  taught  thirty  years, 
ten  in  the  public  schools  of  Boston,  and  have  contributed  $540  to 
the  fund.  Incapacitated  teachers  of  ten  years'  service  are  eligible. 
The  amount  of  the  allowance  is  in  the  discretion  of  the  trustees, 
but  all  allowances  must  be  unifonn.  Assessments  are  compulsory 
upon  all  teachers  entering  the  service  after  passage  of  act  (1900), 
and  upon  other  teachers  who  may  have  once  elected  to  come  under 
its  provisions.  Teachers  retiring  from  teaching  after  ten  years' 
assessments  may  receive  back  one-half  of  their  contributions.^ 

Teachers  Mutual  Benefit  Associations. 
Retirement  Funds. 
These  exist  in  the  cities  of  New  York,  Boston,  Philadelphia,  Balti- 
more, Cincinnati,  Washington,  Norwich,  Conn.,  Hartford,  Conn., 
Indianapolis,  Saint  Louis,  etc.  Initiation  fees  vary  from  $1  to 
$10;  annual  dues  from  $5  to  $40.  The  term  of  service  required 
is  thirty-five  to  forty  years,  or  two  to  five  years  in  case  of  dis- 
ability. Allowances  range  from  $5  a  week  to  $600  a  year,  and 
$100  for  funeral  expenses  in  ease  of  death.  The  temporary  aid 
during  illness  is  $5  to  $6  a  week.     In  Baltimore  the  fund  is  only 


1  For  later  legislation  in  Massachusetts,  see  pp.  131,  278,  279. 


1910.]  HOUSE— No.  1400.  401 

a  retiring  one,  and  not  to  be  used  for  temporary  illness.     There  is 
also  a  Teachers'  Annuity  Guild  in  Massachusetts. 

The  Saint  Louis  Teachers'  Benevolent  Annuity  Association  may 
be  taken  as  an  illustration.  Nine  hundred  teachers  belong,  and  are 
assessed  1  per  cent,  on  theii-  salaries.  The  fund  amounts  to  $68,000, 
and  in  the  last  fiscal  year  the  association  paid  out  $7,755,  consisting 
of  annuities  of  $180  a  year  to  43  former  teachers.  The  fund,  in 
addition  to  the  assessments,  was  augmented  during  the  year  by 
"  a  great  public  festival,  held  by  members  and  participated  in  by 
children  and  their  parents." 

Benefit  Funds  for  Illness   Only. 

These  exist  in  Baltimore,  Saint  Louis,  Cincinnati,  Cleveland, 
Detroit,  Chicago,  Buffalo,  San  Francisco  and  Saint  Paul.  Initia- 
tion fee,  $1  to  $2;  annual  dues,  $1  to  $5;  special  assessments  of 
$1  in  some  cases.  Benefits  range,  in  case  of  illness,  from  50  cents 
a  day  to  $10  a  week;  at  death,  either  actual  funeral  expenses  or 
$1  assessment  on  each  member  of  fund. 

In  Philadelphia,  a  teachers'  fund  has  just  received  a  bequest  from 
the  late  Mr.  Elkins  of  $100,000. 

Summary  op  Existing  Legislation. 

Ten  States  have  statutory  provisions  in  regard  to  teachers'  re- 
tirement funds.  In  two  of  these.  New  Jersey  and  Maryland,  there 
are  State  systems  for  the  benefit  of  all  teachers  of  the  State. 

Fifteen  cities  of  more  than  100,000  inhabitants  have  successful 
teachers'  retirement  funds  in  operation. 

Twenty-five  per  cent,  of  all  the  public  school  teachers  in  the 
United  States  can,  if  they  desire,  participate  in  retiring  allowance 
systems.  The  schools  in  which  these  teachers  teach  serve  a  popula- 
tion of  20,000,000. 


402  OLD  AGE   PENSIONS.  [Jan. 


Appendix  E. 


SAVINGS  AND  INSURANCE  SYSTEMS  OF  THE  FRIED- 
RICH  KRUPP  COMPANY.' 


Life  Insurance  Association. 

In  1877  the  Friedrich  Krupp  Company  established  a  life  insurance 
association  for  the  benefit  of  its  employees,  of  which  a  full  under- 
standing will  be  of  much  practical  value,  since  there  would  seem 
to  be  no  intrinsic  reason  why  such  an  association  could  not  be  estab- 
lished in  the  United  States,  at  least  by  very  large  corporations.  The 
association  was  established  by  the  Krupp  Company  through  a 
foundation  subsidy  of  50,000  marks,  on  which  5  per  cent,  interest 
is  i^aid,  whether  this  rate  is  earned  or  not.  In  the  mean  time,  the 
original  subsidy  has  increased,  in  1908,  to  115,000  marks. 

The  association  has  for  its  object  the  development  of  life  insurance 
among  its  members,  to  facilitate  the  payment  of  premiums,  and  to 
obtain  a  reduction  of  cost.  The  association  secured  these  advan- 
tages through  a  s]:)ecial  agreement  with  eight  representative  German 
legal  reserve  life  insurance  companies,  obtaining  for  itself  the  posi- 
tion of  a  general  agency,  with  full  powers  to  act  in  behalf  of  both 
the  contractual  companies  and  the  members  of  the  association.  The 
association  is  a  corporation  in  its  own  right,  and  is  entirely  separate 
and  distinct  from .  the  Friedrich  Krupp  Company.  The  companies 
under  agreement  with  the  association  grant  the  full  first  commission, 
and  also  the  usual  renewal  commissions  paid  to  the  local  general 
agency.  In  return  for  this  concession  the  companies  are  granted 
the  right,  under  certain  restrictions,  to  canvass  for  insurance  among 
the  members  of  the  association  during  working  hours,  while  volun- 
tary applications  for  insurance  are  referred  to  the  companies  in 
alternating  order,  to  avoid  discrimination  in  favor  of  one  company 
against  another.  The  association  is  a  self-governing  body,  in  which 
every  member  has  at  least  one  vote;  but  the  voting  privileges  are 

1  This  material  is  embodied  in  letters  and  reports  made  to  the  Prudential  Insurance 
Company  by  its  statistician,  Mr.  Frederick  L.  Hoffman,  who  made  an  extended  personal 
investigation  in  Germany  and  Austria  in  1909,  for  the  purpose  of  obtaining  accurate  and 
conclusive  information  regarding  government  insurance  in  those  countries. 


1910.]  HOUSE— No.  1400.  403 

so  arranged  that  there  is  one  vote  for  every  1,000  marks  insurance, 
or  for  every  50  marks  annual  annuity.  The  pecuniary  concessions 
to  the  association  are  equally  divided,  and  one-half  of  the  amount 
of  the  concession  goes  to  the  immediate  benefit  of  the  insured  by 
way  of  premium  reduction,  while  the  other  half  goes  to  the  funds  of 
the  association  to  be  used  for  general  purposes;  this  half,  however, 
is  made  good  by  a  subsidy  of  equal  amount  by  the  F.  Krupp  Com- 
pany, so  that  the  members  obtain  directly  the  full  benefit  of  the 
concessions  secured.  In  addition  to  this  subsidy,  the  F.  Krupp 
Company  pays  the  annual  expense  of  management,  which  during 
1908  amounted  to  not  quite  20,000  marks. 

The  direct  benefits  to  members  resulting  from  this  association  are 
as  follows :  — 

1.  During  the  first  year  of  insurance,  one-half  of  the  agent's 
commission,  which  would  otherwise  be  payable  to  the  insuring  com- 
pany. 

2.  From  the  second  year  of  membership,  and  every  year  following 
thereafter,  a  premium  reduction  of  8  per  cent,  for  insurances  up 
to  3.000  marks,  a  reduction  of  6  per  cent,  for  insurances  from 
3,000  to  9,000  marks,  and  a  reduction  of  4  per  cent,  for  insurances 
of  more  than  9,000  marks.  For  1909  and  thereafter,  however,  the 
premium  reductions  will  be  8  per  cent,  for  insurances  under  4,000 
marks,  7  per  cent,  for  insurances  from  4,000  to  9,000  marks,  6  per 
cent,  for  insurances  from  9,000  to  12,000  marks,  and  4  per  cent, 
for  insurances  of  more  than  12,000  marks.  In  case  of  sickness  and 
absolute  need,  the  members  are  entitled,  after  the  facts  have  been 
carefully  determined,  to  have  their  premiums  paid  out  of  the  funds 
of  the  association,  which,  as  previously  stated,  arise  out  of  the 
reserved  amounts  secured  by  the  concessions  from  the  companies 
and  the  annual  grants  made  by  the  Friedrich  BLrupp  Company. 
^Members  also  may  obtain  loans  for  personal  needs  in  the  manner 
that  such  loans  are  granted,  in  the  first  instance  without  interest, 
but  for  subsequent  loans  an  interest  rate  of  3  per  cent,  must  be 
paid.  Such  loans  can  be  repaid  in  instalments.  The  paj-ment  of 
the  premium  is  automatic  by  deductions  from  the  salaries  or  wages 
paid.  At  the  end  of  1908  there  were  7,215  policies  in  force  with 
the  association,  for  the  sum  of  17,025,000  marks. 

(.1)  In  other  words,  the  life  insurance  association  acts  as  a  gen- 
eral agency  for  its  members,  who,  however,  must  be  employees  of 
the  firm  of  Krupp,  but  the  scope  of  the  association  includes  the 
wives  and  the  children  of  the  membei-s.  The  latter,  however,  can 
only  be  insured  up  to  their  majoritj'.  The  premiums  must  be  paid 
in  cash  to  the  association,  or  they  may  (as  is  usually  the  case) 
be  deducted  in  instalments  from  the  pay  of  the  employees.  Almost 
without   exception  the  wage-earning  members  have  their  premiums 


404  OLD  AGE   PENSIONS.  [Jan. 

in  this  wise  deducted  from  their  two-weekly  pay.  Through  this 
arrangement  a  most  valuable  service  is,  therefore,  extended  to  the 
insured,  —  far  more  valuable,  indeed,  than  the  mere  reduction  in 
the  cost  of  insurance;  but  the  aid  of  the  association  does  not  end 
here,  for  it  includes  all  the  transactions  which  may  be  necessary, 
obtaining  si;rrender  values  or  policy  loans,  as  well  as  the  payment 
of  claims,  and,  I  suppose,  possible  litigation  with  the  insurance 
companies  in  case  of  dispute.  Free  and  qualified  technical  advice 
is  given  in  all  insurance  matters  to  the  members  through  the  officials 
of  the  association. 

(B)  The  most  popular ,  forms  of  insurance  selected  are  limited 
payment  endowment  policies.  Practically  no  annuities  have  been 
applied  for.  On  December  31,  1908,  the  association  had  been  thirty- 
tAVo  years  in  existence,  and  during  the  year  1,289  new  policies  were 
Avritten,  for  3,296,269  marks,  while  504,  for  1,121,315  marks,  were 
discontinued,  leaving  a  net  increase  during  the  year  of  785  policies, 
for  2,174,944  marks;  so  that  on  December  31,  1908,  there  were 
7,215  policies,  for  17,025,229  marks  ($4,052,004.50),  in  force,  or 
an  average  policy  of  2,359.69  marks  ($561.61).  The  premium  pay- 
ments made  to  the  association  during  the  year  were  608,724  marks, 
and  after  deducting  from  this  one-half  of  the  value  of  the  con- 
cession in  premium  reduction  through  the  various  companies  of 
19,266  marks,  the  association  paid  net  to  the  insurance  companies 
the  sum  of  589,457  marks.  In  addition,  there  was  an  increase  of 
6,838  marks  in  interest  charges  on  jDolicy  loans.  In  the  case  of 
626  policy  loans  an  interest  charge  was  made,  and  in  233  eases  no 
interest  charge  was  made.  The  net  annual  gain  to  the  members 
of  the  association  through  the  arrangement  entered  into  with  the 
different  companies  is  given  as  59,357  marks,  or  approximately  8.4 
marks  per  member  per  annum. 

The  number  of  applications  received  during  1908  was  1,277,  of 
which  62  were  declined  and  43  postponed.  Of  the  applications 
accepted,  82,  for  345,000  marks,  were  upon  the  lives  of  members* 
families.  Of  1,277  applications,  1,243  were  for  endowment  policies. 
The  policies  were  nearly  all  participating,  363  being  for  uniform 
dividend  reduction  and  912  for  increasing  premium  reduction. 
There  were  14  applications  accepted  for  non-participating  policies. 

By  amounts  of  insurance,  it  appears  that  416  applications  were 
for  1,000  marks,  237  for  1,500  marks,  284  for  2,000  marks,  145 
for  3,000  marks,  19  for  4,000  marks  and  87  for  5,000  marks.  For 
higher  amounts,  14  were  for  6,000  marks,  18  for  9,000  marks,  27 
for  10,000  marks,  13  for  sums  of  over  10,000  marks  to  less  than 
100,000  marks  and  1  policy  was  for  100.000  marks,  showing  that 
all  classes  of  employees  participate  in  the  beneficial  arrangement, 
which  it  would  seem  should  not  be  impossible  in  the  case  of  large 


1910.] 


HOUSE— No.  1400. 


405 


concerns  in  the  United  States,  and  at  the  same  time  not  prove  detri- 
mental to  the  interests  of  the  active  agency  organization,  since  most 
of  the  insurance  thus  secured  would  in  all  probability  not  be  other- 
wise secured. 

Of  the  504  terminations,  60  were  because  of  death,  69  because 
of  maturity,  105  because  of  surrender,  265  because  the  insured  left 
the  service  of  the  company  (it  does  not  follow,  of  course,  that  the 
policies  were  lapsed,  but  they  only  passed  out  of  the  scope  of  the 
association),  and  finally  5  were  not  taken.  Of  those  terminated 
by  death,  2  had  been  forty-one  years  in  force,  3  had  been  forty 
years,  1  had  been  thirty-seven  yeai's,  4,  thirty-six  years,  etc.;  while, 
of  the  total  number  of  60,  only  2  had  been  less  than  one  year  in 
existence.  Of  the  policies  suiTeudered  for  cash,  31  had  been  less 
than  one-quarter  year  in  force,  15  had  been  half  a  year  and  19 
one  year,  which  would  make  it  clear  that  the  surrendered  policies 
were  really  returned  premium  eases,  possibly  because  the  policy 
holders  left  the  employ  of  the  fiitn. 

The  table  below  will  show  the  distribution  of  insui-ance  in  force, 
by  amounts,  to  illustrate  that  all  classes  of  labor  participate,  and 
that,  therefore,  the  system  can  be  modified  to  meet  a  large  variety 
of  labor  conditions. 

Life  Insurance  in  Force,  Friedrich  Kkupp  Company,  December  31,  1908 


Amount  of  Insurance  (Makks). 


Number  of 
Policies. 

Aggregate 

Amount  of 

Insurance 

(Maries). 

60 

13,380 

189 

104,795 

61 

52,870 

2,783 

2,784.855 

2,388 

4,141,696 

767 

2,279,004 

520 

2,501,929 

369 

3.186,200 

68 

1.163.500 

18 

597.000 

2 

200.000 

Per  Cent. 


300  or  less. 

300-600,  . 

600-900,  . 

900-1,200, 

1.200-2,000, 

2.000-3,000. 

3.000-5,000. 

5,000-10,000. 

10,000-20,000, 

20.0OO-.5O,0OO. 

50.000-100.000, 

Totals,  . 


7,215 


17.025.229 


.1 

.6 

.3 

16.4 

24  3 

13.4 

14.7 

18.7 

6.8 

3.5 

12 


100  0 


In  1004  the  scope  of  the  work  was  extended  to  accident,  liability, 
burglary  and  other  insurance:  but  it  would  not  seem  necessary  to 
go  into  the  details,  except  to  mention  the  fact  that  it  has  been  found 


406  OLD    AGE   PENSIONS.  [Jan 

practicable  to  enlarge  the  field  of  the  association  in  this  direction 
also. 

During  1908  the  association  had  a  life  insurance  premium  income 
of  608,724  marks  and  a  total  income  of  1,102,168  marks,  of  which 
20,882  marks  were  one-half  the  saving  to  the  members  in  commis- 
sions which  would  otherwise  have  been  paid  to  agents.  The  firm 
of  F.  Krupp  gave  the  sum  of  21,146  marks  as  a  direct  gratuity, 
and  6,757  marks  as  guaranteed  interest.  In  the  expense  account 
there  occurs  an  item  of  7,311  marks  as  premiums  paid  for  members 
unable  to  make  their  own  payments,  and  32,160  marks  paid  in 
premiums  returned  to  members  out  of  the  general  fund  of  the 
association.  As  far  as  it  is  possible  to  judge,  7,215  members  saved 
through  the  association  in  1908  the  sum  of  72,087  marks,  or  nearly 
10  marks  each ;  and,  since  the  average  premium  payment  was  about 
84  marks  per  annum  per  member,  the  net  saving  was  over  10  per 
cent.  The  funds  of  the  association  are  now  138,566  marks,  of  which 
41,781  marks  are  in  loans  to  the  members.  While  it  no  doubt  would 
be  difficult  to  adapt  such  a  plan  in  its  entirety  to  American  con- 
ditions, the  system  is  certainly  deserving  of  very  careful  considera- 
tion, as  possibly  (with  necessary  changes  and  modifications)  the  most 
practical  solution  of  the  so-called  "  group  "  plan  of  life  insurance. 

The  Savings  System. 

The  savings  system  was  established  in  its  present  form  in  1900, 
and  from  1,228  depositors  the  number  had,  by  1909,  increased  to 
12,778,  with  total  deposits  of  5,792,316  marks,  of  which  4,241,961 
marks  remained  on  March  31,  1909.  The  deposits,  of  course,  are 
voluntary,  and  made  in  amounts  of  not  less  than  1  mark;  but  they 
rest  upon  an  agreement  with  the  firm  for  the  workmen  to  deposit 
a  specific  amount  every  pay  day,  which  with  the  Krupp  firm  is 
every  two  weeks.  Having  agreed  to  make  such  a  deposit,  the  amount 
is  deducted  from  the  wages  or  salary,  as  the  case  may  be,  in  the 
same  manner  as  deductions  are  made  on  account  of  government 
insurance.  The  depositors  are  divided  into  two  classes,  —  those  who 
receive  wages  and  those  who  receive  salaries;  and  the  former  may 
agree  to  save  as  much  as  20  marks  every  two  weeks,  and  the  latter 
as  much  as  40  marks.  The  amounts  saved  are  deposited  with  the 
City  Savings  Bank;  but  the  firm  agrees  to  pay  5  per  cent,  interest, 
which  means  that,  since  the  banks  pay  only  4  per  cent.,  the  firm 
makes  a  subvention  of  1  per  cent.,  and  of  course  when  the  bank 
rate  falls  to  3  per  cent,  or  3.5  per  cent,  the  subvention  is  so  much 
more. 

In  addition,  the  firm  grants  the  further  subvention  of  1  per  cent, 
of  the  wliole  amount  on  deposit  at  the  end  of  the  year,  which  is 
converted  into  a  lottery  fund  for  the  benefit  of  the  depositors.    Each 


1910.]  HOUSE— No.  1400.  407 

depositor  is  entitled  to  one  lottery  ticket  for  each  25  marks,  so  that 
a  man  with  1,000  marks  on  deposit  is  entitled  to  40  tickets.  There 
is  always  one  chief  prize  of  500  marks,  one  additional  prize  of  300 
marks,  one  of  100  marks,  and  as  many  additional  prizes  of  50  marks 
each  as  the  balance  will  furnish.  Thus,  for  illustration,  in  1909 
44,650  marks  were  thus  distributed,  —  one  prize  of  500  marks,  one 
of  300  marks,  one  of  100  marks  and  eight  hundred  and  seventy-five 
of  50  marks  each.  The  object,  of  course,  is  to  encourage  the  de- 
positors to  let  their  deposits  remain,  which  is  achieved  to  an  unusual 
degree. 

The  underlying  purpose  is  to  attach  the  depositors  to  the  firm; 
and,  as  an  illustration  of  the  advantages  of  this  method  of  saving 
say  50  pfennigs  (or  about  12.5  cents)  a  week,  they  publish  a  table, 
which  is  posted  in  the  works,  according  to  which  1  mark  deposited 
twenty-four  times  a  year  will,  in  ten  years,  amount  to  a  fund  of 
30S.20  marks,  in  twenty  years  to  810.75  marks  and  in  thirty  years 
to  1,629  marks;  so  that,  in  other  words,  a  man  beginning  to  save 
even  as  late  as  thirty-five  years  of  age,  can  by  this  method,  and 
largely  because  of  the  subsidy,  accumulate  quite  a  capital  by  age 
65.  Of  course  other  firms  have  tried  such  a  method,  but  few,  if 
any.  have  been  as  successful;  and  this  success  lies  chiefly  in  a  very 
simple  device,  which  may  be  applicable  to  the  payment  of  insurance 
premiums  through  the  employer,  and  in  particular  to  the  solution 
of  the  idea  of  group  insurance. 

It  had  been  found  that  the  men  did  not  take  advantage  of  the 
savings  plan,  and  that  they  would  not  take  the  trouble  to  fill  in 
blanks  or  forms  pro\-ided  for  the  purpose;  and  it  was  therefore 
suggested  by  one  of  the  employers  that  the  pay  envelope  be  used 
for  the  twofold  purpose  of  announcing  an  intention  to  save,  and 
of  bi-weekly  rendering  an  account  of  the  savings  deducted  from  the 

pay. 

The  back  of  every  pay  envelope,  therefore,  has  for  some  years 
contained  a  brief  explanation  of  the  savings  plan,  and  the  words, 
"  The  undersigned  desires  to  participate  in  the  saving's  fund  of 
Friedrich  Krupp,  and  hereafter  on  every  pay  day  marks  shall 

be  deducted  from  my  pay."  Then  follows  the  name,  the  number 
of  the  employee,  the  branch  of  the  industry  and  the  address.  This 
envelope  is  then  put  by  the  workman  in  a  box,  of  which  one  is 
]n-ovided  at  every  entrance  gate  to  the  works,  and  the  contents  of 
which  are  systematically  collected  through  the  porter  at  the  gates. 
They  are  then  sent  to  the  savings  bureau,  and  by  a  single  entry  on 
the  pay  roll  the  amounts  deducted  from  the  pay  are  accounted  for. 
Thus  by  using  the  pay  envelope  the  first  and  absolutely  necessary 
step  to  make  application  to  the  fund  is  secui'ed. 

The  application  having  been  made  and  the  savings  having  com- 


408 


OLD   AGE   PENSIONS. 


[Jan. 


menced,  every  following  pay  day  the  front  of  the  pay  envelope 
contains  the  correct  account  of  the  firm  with  the  depositor.  This 
account  is  already  in  use  in  any  event,  because  of  the  government 
insurance  and  voluntary  pension  system,  and,  for  illustration,  would 
read:   Wages   for   period   of   two   weeks   ending  M.  ; 

deductions  for  coal   (furnished  at  cost),  M.  ;  for  advance, 

M.  ;  for  sickness  insurance,  M.  (2.6  per  cent,  of  the 

wages  up  to  5  marks  a  day)  ;  for  the  compulsory  jjension  fund, 
M.  (2.5  per  cent,  of  the  wages  up  to  6.5  marks  a  day) ;  for 

invalidity  insurance,  M.  ;  for  fines,  M.  ;  for  life  in- 

surance (for  the  fu'm  has  a  special  life  insurance  system  .  .  .), 
M.  ;  and,  finally,  for  savings  deposits,  M.  .     Of  course 

all  these  items  involve  some  clerical  labor,  but  the  matter  is  quite 
simple  in  practice,  and  the  workmen  fully  understand  it. 

On  December  31,  1908,  of  all  the  wage  earners  of  the  firm,  37.5 
per  cent,  were  savings  bank  depositors  under  this  plan,  and  of  all 
the  small  salary  earners  (monthly  pay),  59.1  per  cent.  The  savings 
bank  department  is  also  used  by  the  workmen  as  a  general  bureau 
of  information  regarding  all  kinds  of  questions,  but  in  particular 
insurance,  savings  and  investments;  and  the  correspondence  on  file 
shows  conclusively  that  a  most  kindly  feeling  of  appreciation  exists 
on  the  part  of  the  workmen  toward  the  firm.  The  following  are 
the  results  by  single  years :  — 


Savings  Fund  of 

Friedrich  Krupp  Company,  1900-09. 

Yeabs. 

Number 
of  De- 
positors. 

Total 
Deposits 
(Marks). 

Interest 
Earnings 
(Marks). 

Interest 

Additions 
by  Firm 
(Marks). 

Total 
(Marks). 

1900-01, 
1901-02, 
1902-03, 
1903-04, 
1904-05, 
1905-06. 
1906-07, 
1907-08, 
1908-09, 

1,228 

2,146 

3,234 

4,737 

6,981 

9,114 

10,746 

11,333 

12,778 

129,876.90 
392,022.53 
727,743.41 
1,163,388.28 
1,925,721.31 
3,067,115.80 
4,274,221.47 
5,171,449.32 
5,792,316. 74 

1,556.66 

6,839.87 

13,214.37 

21,151.47 

36,279.82 

58,958.25 

85,275.41 

119,840.52 

146,294.18 

1,314.04 
4,200.13 
7,700  49 
13,535.07 
21,612.15 
31,334.18 
28,781.741 
27,923.91 

131,433.56 
400,176.44 
745,157. 91 
1,192,240.24 
1,975,536  20 
3,147,686.20 
4,390,831. 06 
5,320,071.58 
5,966,534.83 

1  The  City  Saving.s  Bank  raised  the  rate  of  interest  for  deposits,  dating  from  August 
1,  1907,  from  3.5  per  cent,  to  4  per  cent. 


1910.] 

HOUSE 

No 

.  1400. 

409 

Years. 

Amounts  withdrawn 
(Marks). 

Amounts  remaining 
(Marks). 

1900-01,     . 

24,891.23 

106,542.33 

1901-02,     . 

113,270.03 

286,906.41 

1902-03,     . 

224,426. 63 

520,731.28 

1903-04,     . 

326,953.93 

865,286.31 

1904-05,     . 

511,289.40 

1,464,246.80 

1905-06,     . 

901,222.73 

2,246,463.47 

1906-07.     . 

1,338,534.74 

3,052,296.32 

1907-08,     . 

1,739,968.04 

3,580,103  54 

1908-09,     . 

1.724,572.86 

4,241,961. 97 

In  addition  to  the  savings  facilities  made  available  to  wage 
earners,  the  company  extends  somewhat  similar  privileges  to  salaried 
employees,  and,  all  in  all,  some  30,000,000  marks,  or  about 
$7,500,000,  were  on  deposit  in  1909,  accumulated  during  the  fifty 
years  since  a  savings  fund  on  general  principles  has  been  estab- 
lished. But  in  the  larger  fund  the  deposits  must  be  at  least  200 
marks  to  begin  with.  The  average  deposit  is  about  1,900  marks 
for  wage  earners  and  4,200  marks  for  salaried  officers  and  clerks. 
The  interest  guaranteed  by  the  company  is  5  per  cent.,  the  same  as 
fifty  years  ago.  The  funds  are  invested  in  government  securities 
earning  3.5  per  cent.,  so  that  the  firm  makes  a  material  addition 
to  the  interest  accumulation  on  the  deposits.  About  7  per  cent,  of 
the  depositors  in  this  class  receive  premiums  through  the  lottery 
in  amounts  of  from  50  marks  to  500  marks  each  year,  which  is  a 
much  larger  percentage  of  prizes  than  in  lotteries  generally,  which 
is  about  4  per  cent.  The  cost  of  administi-ation  is  about  %^  of  1 
per  cent,  of  the  amount  on  deposit.  There  is  quite  a  clerical  staff 
of  at  least  a  dozen  persons  required  on  account  of  the  large  number 
of  small  transactions.  The  work  of  the  savings  department  is  ab- 
solutely confidential,  so  that  not  even  the  board  of  directors  can 
learn  the  amount  on  deposit  to  the  credit  of  the  workmen  or  officials. 
The  proportion  of  wage  earners  who  save  by  this  method  is  38  per 
cent.,  and  of  salaried  employees  60  per  cent,  of  the  total  at  work. 
It  has  been  estimated  that  three-fourths  of  these  savings  would  be 
wasted  were  it  not  for  the  fund ;  and  the  success  is  claimed  to  be 
due  solely  to  the  meth(^d  used,  rather  tlian  to  the  very  liberal  attrac- 
tions offered  by  the  tirm.  Annually  a  brief  account  is  rendered 
to  each  depositor  by  the  firm  in  the  form  of  a  card,  which  shows 
the  amount  on  deposit  at  the  end  of  the  previous  year.  The  method 
could  neither  be  more  simple  nor  more  effective,  businesslike,  and 
within  the  intelliiicncc  of  the  most  humble  class  of  laboi'. 


GENERAL  LIBRARY -U.C.  BERKELEY 


B0DD35MTaD 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 

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